Written By Caitlin See
If you have multiple student loans, you might struggle to keep track of the many details of your student debt. Managing different payment dates, loan servicers and interest rates for each loan can quickly become a recipe for disaster.
Loan consolidation can help streamline this repayment nightmare. But how long does it take to consolidate student loans? And what does the process require?
The answers to these questions depend on the type of loans you currently have and which loan servicer you choose to consolidate your loans.
Here’s a breakdown of the loan consolidation process and timeline.
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How does loan consolidation work?
If you have federal student loans, a Direct Consolidation Loan can make repayment easier by rolling all of your existing loans into one new loan.
This provides you with one easy-to-manage monthly payment. It can also give you access to additional loan repayment options and forgiveness programs.
Most federal student loans are eligible for consolidation under the Direct Consolidation Loan program, including but not limited to:
- Subsidized and Unsubsidized Federal Stafford Loans
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans
- PLUS loans from the Federal Family Education Loan (FFEL) Program
- Federal Perkins Loans
You can choose to consolidate all of your federal loans at once. Or select only specific loans to be included in the new consolidation loan.
Note that your consolidated loan interest rate will be based on the weighted average of all of your existing interest rates included in the loan. This number is then rounded up to the nearest one-eighth of one percent — which means you might not save money through consolidation depending on the details of your original loans.
You must review the various pros and cons of consolidating student loans to see if it’s the right solution for you.
Does loan consolidation reset my payment count?
Previously, loan consolidation came with a major drawback: It would reset your payment count to zero, potentially causing you to lose years' worth of progress toward Public Service Loan Forgiveness (PSLF) or income-driven repayment (IDR) forgiveness.
But the IDR Waiver rectified this problem. Under the IDR Waiver, borrowers will receive payment credit for all eligible periods of repayment, including most types of deferment and qualifying periods of forbearance. Additionally, their new Direct Consolidation loan payment count will be based on the loan with the longest payment history.
However, after the IDR Waiver ends (April 30, 2024), new consolidation loans will result in a payment count based on a weighted average of all included student loans.
Be aware that if you recently consolidated your loans, your payment count will be temporarily reset to zero as the U.S. Department of Education works through updating all accounts. Your account should show full payment credits once the adjustment is complete in 2024.
How to consolidate federal student loans
The federal loan consolidation process is fairly straight-forward. The main steps include:
- Explore repayment plans ahead of time. Estimate your monthly payment under various repayment plans by using the StudentAid.gov Loan Simulator.
- Gather your personal and financial information. For example, you’ll need to know the details of each loan, including the loan code, account number and estimated payoff amount. And you’ll need income documentation if you plan to repay your consolidation loan under an IDR plan.
- Continue to make student loan payments on your current loans. The Department of Education will need to confirm your loans are eligible for a new Direct Consolidation Loan and confirm payoff amounts.
Your new loan servicer will notify you when the process is complete or if additional information is needed.
How long does it take to consolidate student loans?
Loan consolidation doesn’t happen overnight. It could take weeks or even months to gain approval depending on which loan servicer you select during your Direct Consolidation Loan application.
Depending on your situation, you may want to factor processing times into your loan servicer selection.
The typical loan consolidation timeline is 30-45 business days from the date of receipt of the application. However, each federal loan servicer's processing times might vary.
For example, when previous loan servicers were contacted directly, Navient and OSLA Servicing estimated a processing timeline of 70-75 business days. Meanwhile, Great Lakes stated they had a 30-45-day timeline and indicated it was a Department of Education standard. FedLoan’s website estimates an origination process of about 30 business days.
Beyond general processing times, student loan borrowers can unintentionally extend the process by their own actions.
Common processing delays include:
- Missing information or incomplete application.
- Providing insufficient proof of income if an income-driven repayment plan is selected or required.
- Selecting the wrong loans when choosing to consolidate only a portion of student loans.
- Adding eligible loans after your initial application.
- Making any changes to your application after submission.
Additionally, borrowers should factor in added delivery and processing time if they choose to mail their consolidation application instead of submitting it online.
Private student loan consolidation solution: refinancing
Like consolidation, student loan refinancing allows you to pay off multiple existing loans by combining them into one new loan with one monthly payment. When you refinance student loans, the process takes place with a private lender.
Refinancing is an excellent option if you already have private student loans. It can lower your interest rate and potentially save you thousands of dollars in interest over the life of your loans.
We recommend shopping around for the best refinancing rates and repayment terms for your private student loans at least once a year.
You can also choose to refinance federal student loans into a private loan. But if you have federal loans, you’ll need to weigh the pros and cons of refinancing since you’ll lose access to federal borrower benefits and protections.
How long does it take to refinance?
The refinancing process and timeframe will vary depending on the private lender you choose to move forward with.
Credible has one of the fastest application experiences among refinancing lenders.
Some platforms allow you to check your refinancing rate using a soft credit check. But your refinancing application will require you to provide personal and financial information (e.g. Social Security Number, income, etc.). You’ll also need to provide information about each of your existing student loans.
Once you’ve submitted your refinancing application, expect it to take several weeks to complete the refinancing process.
For example, refinancing with Laurel Road can take up to 30 calendar days. But the process is usually completed within two to three weeks, depending on how quickly you submit your supporting documentation.
Earnest refinancing takes about the same timeframe. Its application review is usually completed within three to five business days. And then loan processing and payout can take an additional two to three weeks.
Because each refinancing lender has its own process, it’s best to check with your lender directly to better understand its estimated timeline.
Get expert help for your student debt
Consolidating your student loans has many advantages. But it could set you back or cost you more in your overall student loan repayment journey if you don’t understand its caveats.
Our team of student loan experts can walk you through various repayment strategies and help you decide if loan consolidation is right for you. Schedule a consult today to receive a customized repayment plan.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
