The Direct Consolidation Loan offers borrowers with multiple federal loans and high balances the opportunity to consolidate (combine) those loans into a single federal loan with one, usually lower, rate of interest.

Consolidated loans typically involve repayment over a longer period, which reduces the monthly payment to a manageable amount. The extended repayment period sometimes also leads to a higher total amount to repay over the term of the loan, due to accruing interest. Loan consolidation can offer the following benefits:

• Reduce the number of loan payments you must make each month
• Lower your total monthly education loan payment amount
• Help you avoid loan default or poor credit rating
• Help you return a defaulted loan to good standing

Some features of the original loans, such as grace periods and special forgiveness clauses, may not be a part of the consolidated loan. Terms of consolidated loans should be examined carefully to ensure that the benefits exceed the costs for the individual borrower.