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What happens when you consolidate?

Step 3

Consolidation is the process of taking out a new loan from the Department of Education to replace your existing loan or loans. When you consolidate your loans, you will be left with one new loan called a “Direct Consolidation Loan.” If you have any loans other than Direct Loans, you will need to consolidate them into a Direct Consolidation Loan in order for your loans to qualify for PSLF. 


IMPORTANT: Apply by October 31, 2022 to ensure you get credit for all payments prior to consolidation.

Reminder - Before you consolidate, check to make sure your employer is PSLF eligible!

How to consolidate your loans?

Watch an info video here or see the instructions below.


Go to the federal government’s loan consolidation website and log in


Navigate to the Direct Consolidation Loan Application

The online application will allow you to select the loans that you want to include in your consolidation.

TIP: Although you are not required to consolidate your existing Direct Loans, the Department of Education has indicated that for borrowers who consolidate all of their loans, it will use the oldest of those loans, which will likely have the most qualifying payments toward PSLF forgiveness, to determine when to forgive the entire new consolidated loan. For this reason, we recommend borrowers consolidate all of their loans together. 

The application will also ask you to select the loan servicer that you want for your newly consolidated loan. You can select any servicer, including your current servicer.

You will also be asked to select a repayment plan for your new consolidated loan. Selecting an income-driven repayment plan, such as Income-Based Repayment or Pay As You Earn, that is affordable is often the best option for most borrowers. 

IMPORTANT: Make sure that your repayment plan is eligible for PSLF. Generally, the standard 10-year repayment plan and the income-driven repayment plans are eligible for PSLF.


Finalize your consolidation application

After you have made it to the end of the consolidation application, you will be asked to review terms and sign for your new loan.


Once completed, it may take several weeks to receive confirmation of your new Direct Consolidation Loan. In the meantime, you can still continue the process to apply for PSLF. 


Remember: the deadline to apply for the PSLF waiver is October 31, 2022

Have more questions? Visit our Frequently Asked Questions. 

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