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 Consolidation Loan application.
- Direct Consolidation Loans - must be combined with another FFEL, Perkins, or Direct Loan 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 loan multiple times with different lenders to get a lower interest rate or remove a cosigner.
Ahead, learn when you can consolidate student loans more than once.
Consolidating federal student loans more than once
The U.S. Department of Education 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 repayment plans if you can't consolidate again but want a lower payment. Contact your student loan servicer and review your repayment options, including forbearance, if necessary.
You can apply for a new Direct Consolidation Loan for free on the Federal Student Aid website, studentaid.gov.
Learn More: IDR Loan Forgiveness
Refinancing 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 rate 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 rate 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 repayment.
- 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 FSA 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.
Contact the Federal Student Aid Information Center at 800-433-3243 if you have trouble accessing the site.
Thinking about consolidating a second time? Let's talk.
If you're considering consolidating again to stop a garnishment, qualify for PSLF, or lower your payments, I can help decide for you.
Schedule a free 10-minute 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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