A federal consolidation loan is designed to assist you with managing your student loan debt. It allows you to combine multiple student loans together, thus having only one loan to pay. Loan consolidation helps you merge your existing loans into a new single loan known as the Federal Consolidation Loan. Consolidation loans combine several students/parent loans into one bigger loan from a single lender, what can be used to repay the balances on other loans. This is similar to refinancing a mortgage.

A list of loans you can consolidate:

• Subsidized and unsubsidized Federal Stafford Loans
• Federal Grad PLUS Loans
• Federal Supplemental Loans for Students (SLS)
• Federal Perkins Loans
• Health Professions Student Loans (HPSL), including Loans for Disadvantaged Students (LDS)
• Health Education Assistance Loans (HEAL)
• Federal Insured Student Loans (FISL)
• Federal PLUS (Parent Loans for Undergraduate Students) Loans
• Federal Nursing Loans (NSL)
• Federal Consolidation Loans (if you have at least one other eligible loan to consolidate with it)

If you have several federal education loans, you may be able to combine — or consolidate — them into one loan. In doing so, you could:

• lower your monthly payment,
• lock in a fixed interest rate, and
• Combine multiple loan balances to make just one monthly payment.

Free debt consolidation quote

Because debt consolidation is often a one-time decision, you’ll want to learn as much as you can before deciding. TG offers you a resource for exploring your consolidation options, provides an overview of the consolidation process, and answers common questions about free debt consolidation.

Questions to ask potential consolidating lenders:

• What are the repayment incentives? If yes, what are they? 
• Are you likely to qualify for their repayment incentive program?
• If you are late on a payment, do you still qualify for incentive benefits?
• Is this a Federal Consolidation Loan (not a private consolidation, which most likely has different terms)?
• Will the loan be sold to another lender or servicer? If so, to whom and when?
• What customer service options do they offer? Can you manage your loan online?

Investigate cancellation, forgiveness, and discharge

Under certain circumstances, your Consolidation debt Loan, or a portion of that loan, may be cancelled, forgiven, or discharged. In other words, you won't have to repay it. Below is a summary of some of the cancellation provisions that loan holders, guarantors, and the U.S. Department of Education administer. Contact your loan holder for more information:

• Death: If you die, your loan obligation will be cancelled.
• Total and permanent disability: Your loan may be cancelled if you become totally and permanently disabled.
• Teacher forgiveness: A loan forgiveness program for teachers serving in designated low-income schools exists for new Stafford loan borrowers after October 1, 1998.
• Miscellaneous: A portion of your Debt Consolidation Loans may be cancelled in other instances including school closure, false certification, identify theft, failure of the school to pay a refund, or employment in a public service job (for Direct federal loan consolidation only).