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Student Loan Consolidation

A Direct Consolidation Loan may help make payments more manageable by combining several federal student loans into one loan with one monthly payment. You may apply for a Direct Consolidation Loan offered by the U.S. Department of Education and choose a servicer, like HESC/Edfinancial Services, and a repayment plan, such as an Income-Driven Repayment (IDR) Plan.

Please be aware that there is no application fee to consolidate your federal student loans into a Direct Consolidation Loan. You may be contacted by private companies that offer to help you apply for a Direct Consolidation Loan, for a fee. These companies have no affiliation with the U.S. Department of Education or their consolidation loan servicers.

How can consolidation help you manage your debt?

Loan consolidation can offer benefits which may help you manage your federal student loan debt. Consolidation allows you to:

  • Make lower monthly payments by increasing the repayment period (Note: This will increase the total amount you repay over the life of the loan).
  • Make a single monthly loan payment to one company.

As with other federal student loans, you may prepay a consolidation loan without penalty and may change repayment plans if you find that the current plan no longer meets your needs.

Is there a downside to consolidation?

Although consolidation can help many students manage their monthly payments, there are some cases when consolidation may not be right for you.

  • Any previous payments made prior to consolidation will not count toward IDR forgiveness or Public Service Loan Forgiveness (PSLF).
  • You may lose certain benefits (such as cancellation benefits, interest subsidies, etc.) that were offered on the original loans. If you are close to paying off your student loans, it may not make sense to consolidate. By extending the years of repayment for the loans, you may be increasing the total amount you will have to pay in interest.
When you combine multiple loans into one, you may lose any incentive programs on the original individual loans.
Pros Cons
Lower monthly payments Longer repayment schedule:
Consolidation may extend how long you have to pay off student loans, sometimes up to 30 years.
Fixed interest rate More interest to pay:
You may pay more interest since you'll be making payments for a longer period of time. Plus, the new interest rate is based on weighted average of the underlying loans, rounded to the nearest higher 1/8th of one percent.
Convenience of one bill with one payment Loss of loan incentives:
When you combine multiple loans into one, you may lose any incentive programs on the original individual loans.

Do your homework. If you simply need a smaller payment or if you're experiencing a temporary financial hardship, you may want to consider changing your repayment plan before considering consolidation.

Helpful Tips

  • Not all loans qualify for loan consolidation, so check to see if this is an option for you.
  • Once you consolidate, you can re-consolidate only if you have an eligible student loan that was not included in the original consolidation.

Federal Student Aid ID

If you do not already have one, request an FSA ID from the U.S. Department of Education Federal Student Aid Web site. The FSA ID will be required to e-sign and submit the consolidation application online, which is the most efficient method for submission.

How to Apply

Apply online at StudentLoans.gov.

Before you complete the online combined application and promissory note and select a repayment plan, you can estimate what your monthly payments will be under each of the available repayment plans using the online calculator on the U.S. Department of Education's Loan Consolidation web page.

You may also print, complete and mail a paper application to:

PO Box
For USPS mail including Priority Express
Street Address
For FedEx or UPS
HESC/Edfinancial
c/o Navient LCP - E1140
PO Box 8007
Fishers, IN 46038-8007
HESC/Edfinancial
c/o Navient LCP - E1140
11100 USA Parkway
Fishers, IN 46037-9203

Note:  You must continue making payments until you receive notice from your servicer that the original loans included in your consolidation request have been paid off due to the consolidation.