The consolidation decision

As a college graduate, two things haunted my dreams: finding a job to support myself and managing my student loan repayment (specifically, whether I should consolidate my student loans or not).

Consolidation is a term many students are unaware of until it’s too late. It allows a person to combine his or her loans into one loan and make one monthly payment.

During my last two years of college, I became more aware about finances and took a greater interest in my student loans. Once I figured out the exact amount of loans I owed, I contacted my financial aid department and asked to receive more information about consolidating my loans. It was a smart decision.

I understand there is a lot going on in your life — I’m right there with you. But it’s important to think about your future financial well-being, and that includes thinking about consolidating your student loans as you consider your student loan repayment options.

Here are some things to consider before choosing to consolidate:

  • Consolidation usually reduces the loan into one monthly payment; however, it is spread out over a longer period of time.
  • There aren’t prepayment penalties, so if you want to pay more than is required each month, you can.
  • The interest rate on a federal consolidation loan is the weighted average on the loans you include rounded up to the nearest 1/8 of a percent. So if you include loans that already have a fixed interest rate (the ones made after July 1, 2006) you may end up paying more over the life of the loan.
  • There are a number of other repayment options that might be a good fit as well, like extended repayment for borrowers with over $30,000 in federal student loans.
  • Private student loans can’t be included in a Federal consolidation loan; however some private lenders offer private consolidation loans. (Keep in mind that you should never consolidate federal student loans through a private consolidation loan!)
  • You can only consolidate federal student loans during the grace period or after the loan enters repayment — NOT while you’re in school.

Think carefully before consolidating your loans! You can’t unconsolidate them, and you might not want to include some loans (like Perkins loans) because you could lose benefits or the interest rate could increase.  So be sure to examine your loan information and talk to your lender before making a decision.

I know that’s a lot of info to process, but we’re here to help! Anyone have questions about the consolidation decision?

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7 Responses to The consolidation decision

  1. Dina says:


    I have a Sallie Mae loan that was consolidated awhile ago. I now have a direct loan that will need to start paying in February, 2012. I would like to combine both loans into one payment. What is my best option?


    • Barbara says:

      Hi Dina – thanks for your question. In general, we do not recommend you consolidate your private student loans with federal student loans, as the terms are different between these types of loans. Technically you could pay off your loans with another type of consumer credit; however, you’d lose some of the benefits of a federal loan by doing so.

  2. Jenn Turner says:

    I have sallie mae and ACS loans, apprx. 40,000
    I have Wells Fargo for my mortgage company. I am begining to fall behind in my payments on my student loans. I am not sure if I should try and see if I should take out a home equity loan, to repay my student loans or if I can consolidate all my student loans into one payment.

    • Caroline says:

      Hi Jenn – thanks for your question. You do have the option to consolidate your private student loans. Wells Fargo is one of the few lenders that offers private student loan consolidation. You can consolidate all your student loans with Wells Fargo, even if you don’t have a Wells Fargo student loan. To learn more about consolidating your private student loans, call us at 1-800-658-3567.

  3. chandz says:

    Hello! 🙂

    I just graduated and i have a huge sallie mae loan (currently in my 6 month grace period- going to have to start repaying beginning January 2014) and i also took out a wells fargo loan one semester for about 4,000. My question is would it be possible to consolidate both those loans? If so, do you know how the interest would be calculated after the consolidation? Also, would I have to consolidate through wells fargo or sallie mae? I know i shouldn’t consolidate my federal loans with my private loans so i won’t get into that, but i was really confused on how i would be able to go about consolidating my private loans with wells fargo and sallie mae. Another question i have regarding this is if i am able to consolidate both these loans will i get an extra 6 months of grace period to repay?

    Thank you so much!!! This stuff is so stressful haha!

    • studentloandown says:

      Hey – These are great questions! You should be able to combine the Sallie Mae loans with your Wells Fargo loans since they are both private loans. Please contact us at 1-800-658-3567 or shoot as an email at and click “Contact Us” so we can discuss the consolidation option, and you can determine what options best meet your needs.

  4. Rafaela says:

    Good depth 🙂

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