What Are Direct Consolidation Loans?

What exactly are direct consolidation loans

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Direct Consolidation Loans are one single loan that you end up with if you choose to combine multiple federal student loans.

Advantages of Direct Consolidation Loans

The main reason why students combine their federal student loans into a single Direct Consolidation Loan is convenience. Borrowers who refinance and consolidate their loans only have to keep track of one deadline and make only one payment every month instead of dealing with multiple deadlines and multiple payments, which can get overwhelming.

In addition to being convenient, loan consolidation also lowers your monthly payments making it easier for you to meet your financial commitments so you are at lower risk of late payments and default.

Commonbond company logo.

Consolidate private and federal loans

Variable APR from 1.98% - 7.04% with auto-debit

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Drawbacks of Direct Consolidation Loans

Consolidating makes your loan repayment strategy simpler. However, it does have a few disadvantages that you should take into consideration.

Lowering your monthly payments typically means extending your repayment term. This means you will end up paying more by way of interest over the life of the loan.

Another drawback is that you will lose out on any benefits you are entitled to under the terms of the original loan, including your eligibility to apply to the student loan forgiveness program.

Is A Direct Consolidation Loan The Right Choice For You?

It is advisable to take time to weigh the pros and cons of Direct Consolidation Loans. Only choose this option if it works for you, and keep in mind your long term goals.

If you’re looking to refinance or consolidate your private student loan, be sure to give our guide a look!


Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.74% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.89% - 5.90%*
Fixed APR: 2.50% - 6.00%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.98% - 7.04%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 6.22%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 6.52%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.79%*
Fixed APR: 2.99% - 4.89%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

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