How Many Times Can You Consolidate Student Loans?

Student loans can typically be consolidated once. But if you have older loans or borrowed new debt since consolidating, you may be able to do it a second time.

There are a handful of times where student loans can be consolidated twice.

• FFEL Consolidation Loans – can be bundled with other federal student loans into a new loan with a single payment but can also be the only loan in a new Federal Direct ConsolidationFederal Direct ConsolidationThe combining of one or more federal student loans into a single new Direct Consolidation Loan. Consolidation can restore defaulted loans to good standing, change the servicer, and open access to certain repayment plans and forgiveness programs. Loan application.
• Direct Consolidation Loans – must be combined with another FFEL, Perkins, or Direct LoanDirect LoanA federal student loan made directly by the U.S. Department of Education under the William D. Ford Federal Direct Loan Program. Most federal student loans issued since 2010 are Direct Loans. before adding it to another federal student loan consolidation.
• Private student loans – can be paired with other federal and private student loans and added to a new private loan consolidation. You can also refinance a private student loanPrivate Student LoanA student loan issued by a bank, credit union, or other private lender rather than the federal government. Private loans generally lack federal protections like income-driven repayment and broad forgiveness programs. multiple times with different lenders to get a lower interest rate or remove a cosignerCosignerA person who signs a loan agreement alongside the primary borrower and becomes equally responsible for repayment. Cosigners are common on private student loans when the student has limited credit or income history..

Ahead, learn when you can consolidate student loans more than once.

Consolidating federal student loans more than once

The U.S. Department of EducationU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans. allows you to consolidate student loans more than once if:

• You have another federal student loan to include with the consolidation loan.
• You have a consolidation loan made under the Federal Family Education Loan ( FFELP) Program.

Consolidating a second time allows you to escape student loan default, qualify for different student loan forgiveness options, and make a single payment. But it won’t lower your interest rate. Your new interest rate will be based on the weighted average of the rates of the loans you consolidate.

Check out the income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plans if you can’t consolidate again but want a lower payment. Contact your student loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education. and review your repayment options, including forbearance, if necessary.

Learn More: IDR Loan Forgiveness

RefinancingRefinancingTaking out a new private loan to pay off one or more existing student loans, usually to lower the interest rate or change the repayment term. Refinancing federal loans into a private loan eliminates federal benefits like IDR and PSLF. private student loans more than once

The consolidation process for private student loans is called refinancing. You can refinance federal and private student loans with a private lender to get a lower fixed interest rateFixed Interest RateAn interest rate that stays the same for the life of a loan. Federal student loans carry fixed rates; some private student loans offer fixed or variable options. or better loan terms.

There’s no limit to the number of times you can refinance student loans.

Savvy student loan borrowers refinance more than once to take advantage of competitive variable interest rateVariable Interest RateAn interest rate that can change over the life of a loan, usually based on a market index. Variable rates often start lower than fixed rates but can rise or fall over time. loans. So long as you qualify, you can keep refinancing to get the best terms to repay your student loan debt.

Eligibility for student loan refinancing varies by lender, but you’ll typically need:

• A blemish-free credit report.
• A credit score in the high 600s.
• Enough income to cover living expenses and the student loan payments.

If you don’t qualify on your own, consider refinancing with a cosigner. But before you do, make sure you understand the requirements for a cosigner release.

Do note, refinancing federal loans with a private lender causes them to lose protections and access to loan forgiveness programs.

Learn More: Student Loan Cosigner Rights

Benefits of a second consolidation

The benefits of consolidating a federal loan twice are:

• Extended repayment periods: If you need lower monthly payments to balance your budget, consolidating will extend the life of your loan. The longer repayment period will reduce the size of your monthly payments under the Standard, Extended, and Graduated Repayment Plans.
• One convenient monthly payment: Consolidating allows you to combine all federal loans into a single loan. This can be especially helpful for borrowers with different servicers or loan types (e.g., Direct Loans, FFEL Loans, Perkins Loans, etc.). However, be careful about combining Parent PLUS Loans with other non-PLUS Loans. Doing so will make you ineligible for most income-driven repayment plans other than income-contingent repaymentIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation..
• Qualify for new benefits: In some cases, a second consolidation may help you qualify for an income-driven repayment plan and other forgiveness options.

Learn More: Are Student Loans Forgiven After 20 Years?

Drawbacks of a second consolidation

Consolidating a second time isn’t without consequence. Some drawbacks to consider are:

• The loan balance will increase. When you consolidate, the outstanding interest of all the loans included is added to the principal balance of the new loan.
• Pay more interest: Resetting the repayment term can cause you to take longer to pay the balance, which will increase the total amount of interest that accrues over the life of the loan.
• Loss of qualifying credit: When you consolidate a second time, you lose any credit you’ve earned towards loan forgiveness and cancellation. Your new loan will start fresh with the payments you’ll need to make before your loans can be forgiven. The one exception is consolidating to take advantage of the PSLF update. You can consolidate and get credit for past payments for a limited time.

How to consolidate a second time

• Step 1 – Visit studentaid.gov. You’ll need an FSAFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers. ID to access the website. Once you’re logged in, click “Manage My Loans” and then “Consolidate My Loans”.
• Step 2 – Add loans to your consolidation application. You can choose to consolidate some or all of your loans. You’ll see the new loan amount and interest rate before submitting your application.
• Step 3 – Submit the application. Consolidation is the one time you can choose which of the student loan servicers you want to work with to handle your account.

The consolidation process takes about two to three months to complete.

Thinking about consolidating a second time? Let's talk.

If you’re considering consolidating again to stop a garnishment, qualify for PSLFPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer., or lower your payments, I can help decide for you.

Schedule a call with me today. We’ll go over all of your options to put you in the best financial position moving forward.

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