Student loan consolidation under the 2026 rules

What consolidation is

A Direct Consolidation Loan pays off the federal loans you choose and replaces them with one new federal loan and one bill. The loans paid off are discharged and no longer exist, so consolidation can’t be reversed. Most federal education loans qualify: Direct Loans, FFEL loans, Federal Perkins Loans and several health-profession loans. Private loans don’t.

The new loan keeps a subsidized part for the subsidized loans you consolidate and an unsubsidized part for the rest.

The big change: two plans after July 1, 2026

Under the 2025 law, a Direct Consolidation Loan made on or after July 1, 2026 can only be repaid under the Repayment Assistance Plan or the Tiered Standard Plan. Like any loan made since that date, it also limits all your Direct Loans, older ones included, to those two plans. IBR, the 10-year Standard plan, Graduated and Extended are no longer available to you.

Tiered Standard runs 10, 15, 20 or 25 years depending on the total balance. If you are happy on IBR today, consolidating now gives that up. The two-plan rule · RAP explained

Your new interest rate

The rate is fixed for the life of the loan: the weighted average of the rates on the loans being consolidated, rounded up to the next 1/8 of a percent, with no cap for applications received since July 1, 2013. So consolidation doesn’t lower your rate; it keeps it about the same, a little higher after rounding. Any variable-rate loans become fixed.

Unpaid interest on the old loans is added to the new loan’s principal, so interest is then charged on a larger balance.

Rate and term calculator

Balances should include unpaid interest. Counts are qualifying payments toward PSLF or income-driven forgiveness on each loan; the new loan gets the balance-weighted average. Estimates only; your servicer sets the actual figures.

What happens to your PSLF and IDR count

Qualifying payments you made on Direct Loans carry into the consolidation loan as a weighted average by balance. StudentAid.gov’s example: 60 payments on a $30,000 loan plus 0 on another $30,000 becomes 30 payments on the new loan. For income-driven forgiveness the average is rounded up to a whole month. Consolidating a loan with many payments together with a new loan with none can cost you credit. PSLF calculator

What you can lose

• IBR and the older plans, for every Direct Loan you have, once a consolidation loan is made on or after July 1, 2026.
• Benefits tied to the original loans, such as interest rate discounts, principal rebates or some cancellation benefits. Perkins cancellation for qualifying jobs is the main example; StudentAid.gov suggests leaving such loans out.
• Payment credit, when loans with different counts are averaged.
• Time and interest: a longer term lowers the payment but raises the total paid.

You don’t have to consolidate every loan; you choose which to include, and you can add eligible loans within 180 days after the consolidation loan is made.

Parent PLUS: keep them separate

StudentAid.gov warns that consolidating parent PLUS loans together with loans for your own education can cost your own loans their repayment options. A consolidation made on or after July 1, 2026 that includes parent PLUS loans has only Tiered Standard, which doesn’t count for PSLF. Consolidating the two kinds separately avoids that. A parent PLUS consolidation made before July 1, 2026 keeps its route to ICR and then IBR. Parent PLUS calculator · Parent PLUS rules

FFEL and Perkins loans

FFEL and Perkins loans can’t use RAP or Tiered Standard directly; consolidation is how they get there. Consolidating them now also brings every Direct Loan you have under the two-plan rule. Most FFEL loans can use IBR without consolidating, so compare first. FFEL and Perkins

Consolidating out of default

• Before consolidating a defaulted loan you must either make three consecutive, voluntary, on-time, full monthly payments on it, or agree to repay the new loan under an income-driven plan.
• A loan under a wage garnishment order or a court judgment can’t be consolidated until the order is lifted or the judgment vacated.
• Collection costs can be added to the new loan, up to 18.5% of the defaulted loan’s principal and interest.
• It gets the loan out of default faster than rehabilitation, but the default stays on your credit history; rehabilitation removes it.

Rehabilitation vs consolidation

How to apply

1. Check which loans you have, their rates and their payment counts on your StudentAid.gov dashboard.
2. Apply for a Direct Consolidation Loan on StudentAid.gov (online or by mail). There is no fee; StudentAid.gov says most people finish the online application in under 30 minutes.
3. Choose which loans to include and pick a repayment plan on the application.
4. If some loans are still in their grace period, you can ask for consolidation to wait until near its end.
5. Keep paying your current loans until the servicer confirms they are paid off. The first payment on the new loan is due within 60 days after it is paid out.

Questions people ask

Does consolidating lower my interest rate?

No. The new rate is the weighted average of your current rates, rounded up to the next 1/8 of a percent, so it is about the same or slightly higher. A lower monthly payment comes from a longer term or an income-driven plan, not a lower rate.

Can I still get IBR if I consolidate now?

No. A Direct Consolidation Loan made on or after July 1, 2026 can only be repaid under RAP or Tiered Standard, and receiving it limits all your Direct Loans to those two plans.

Can I undo a consolidation?

No. StudentAid.gov says the consolidated loans are considered paid off and no longer exist.

Does consolidation cost anything?

There is no application fee. A defaulted loan that is consolidated can have collection costs added, up to 18.5% of its principal and interest.

Do I have to consolidate all my loans?

No. You choose which eligible loans to include, and you can add loans within 180 days after the consolidation loan is made.

Can private student loans be consolidated into a federal loan?

No. Only federal education loans can go into a Direct Consolidation Loan.

When is the first payment?

Within 60 days after the consolidation loan is paid out. Keep paying your old loans until your servicer confirms they have been paid off.