Federal Student Loan Consolidation

Last year, millions of students who previously borrowed their federal student loans through private banks and lenders could no longer do so. Congress eliminated the Federal Family Education Loan Program (FFELP) and moved all student loans into the Federal Direct Student Loan Program (DL). Because the DL program is less expensive for the government to run, Congress could then use the money saved to increase grant aid to needy college students as well as support other higher education priorities. As a result, your new federal student loans are now Federal Direct Student Loans and are funded and serviced directly by the U.S. Department of Education and its authorized contractors.


  • Your old federal student loans are likely still owned by your old FFELP lender and servicer.
  • The U.S. Department of Education has assigned one of its five contractors to service your new student loan(s) and this servicer may be different from your FFELP loan servicer.
  • Therefore, once you enter repayment with multiple lenders and servicers, you will receive separate bills from each one, for the statutory minimum payment each month – multiplying your monthly loan repayment obligation.
  • Student borrowers with multiple loans at multiple lenders and/or servicers can have a higher rate of loan default because of the difficulty in tracking and managing their monthly payments.
  • Your interest rate and loan balance will not change if you consolidate.


  • We recommend that you begin the consolidation process 4 months after graduating or leaving school, so that the consolidation takes place at the very end of your statutory 6 month grace period. (It can take 6 to 8 weeks for the consolidation process to be completed.)
  • If you consolidate before the grace period begins or before it expires, you will lose the grace period and repayment will begin right away.


  • Review your loans and who your loan holders are at http://www.nslds.ed.gov.
  • If your loans are held by multiple lenders and/or servicers, consider consolidating.
  • If your loans are held by the same government servicer but are both FFELP and DL loans, consider consolidating.
  • Once you are in the 4th month of your grace period after graduating/leaving school, go tohttp://www.loanconsolidation.ed.gov/, the U.S. Department of Education’s Direct Consolidation Loan web site. Follow directions for consolidating your federal student loans (both FFELP and DL loans) into one Federal Consolidation Loan.


  • For more information about the benefits of consolidating and whether or not it’s right for you, check out the Department of Education’s website at http://www.loanconsolidation.ed.gov.

Prepared by the National Direct Student Loan Coalition (NDSLC), a non-profit organization comprised of schools dedicated to the continuous improvement and strengthening of the Federal Direct Loan Program