August 10, 2021

How Long Does It Take To Consolidate Student Loans?


How long it takes to consolidate student loans varies per loan servicer. Every loan servicer has its consolidation process with a timeline ranging between 30 and 75 business days, depending on the kinds of loans you intend to consolidate (federal or private).

Consider the following timelines for consolidating student loans to get a general overview of the process.

How Long to Consolidate Student Loans?

Loan consolidation may take several weeks or months, depending on your servicer. The process involves combining your existing loans into one new policy so you can make single monthly payments instead of multiple ones.

For federal student loan consolidation, expect a few months after application before your new consolidated loan takes effect. Meanwhile, consolidating or refinancing private student loans may take weeks, depending on a servicer’s unique process.

Consolidating Federal Student Loans

You must complete the Federal Direct Consolidation Loan Application and Promissory Note in a single session to consolidate your federal student loans. This online process may take 30 minutes to complete, granted that you have gathered all your personal and financial information ahead of time.

After your application, your new loan servicer will contact you to determine whether you need to submit additional information. Expect 30 to 45 business days before you get results. Although this timeline is the Department of Education standard, some servicers require up to 75 business days for complete processing.

Meanwhile, you must continue paying your current loans until your servicer proceeds with the consolidation process. Once your new servicer determines your existing loans are eligible for consolidation, you can begin paying your new loan to pay off your old ones.

On top of their standard processing period, you may encounter processing delays due to unintentional errors. To ensure a smooth process, you may need assistance from a student loan advisor to help you prepare your application documents.

Refinancing Private Student Loans

Each refinancing lender has a unique process that typically takes up to three weeks to complete. Most private lenders take five days to review your application thoroughly and require two or three more weeks to process your payout.

This general timeline depends on how fast you provide your supporting documents. You will need to prepare your personal and financial information beforehand to ensure everything runs smoothly.

The private lender you choose for refinancing typically conducts a credit check to determine your rate. So, be sure to provide your most recent documents to access better rates.

Should I Consolidate My Student Loans?

Combining multiple student loans into one loan can help simplify your repayment terms and help you reduce your stress in the long run. On average, student loan debt for graduates with bachelor’s degrees is at $29,000. If you’re planning to repay this within ten years with a loan interest rate of 4.53%, you’ll have to shell out $305 every month. This amount can take a toll on your life, especially if you had several student loans.

You can consolidate your federal student loans by applying for a single federal direct consolidation loan or by refinancing your student loans through a private financing institution.

Consolidating all of your student loans is a smart move as you’ll be able to:

Easily Manage Your Debt

Consolidating your student loans will make it easier for you to manage your debt because you’ll only have to make one loan payment every month instead of making several.

More Time To Pay Off Your Debt

With the number of private companies offering loan consolidating services, you won’t have any problems finding one that allows you to pay your student loans within a longer repayment term. This can be very beneficial to you because the longer your repayment term is, the lower your monthly payment will be.

Have One Fixed Interest Rate

Aside from being stressful, having to pay different loans from different lenders can also cost more money in the long run as lenders often have different interest rates. You won’t have to worry about this problem when you choose to consolidate your student loans, as you’ll only have to think about one interest rate moving forward.

Knowledge Is Power

In short, you’ll have better chances of living a debt-free life if you consolidate your student loans. While you can consolidate federal student loans or refinance both federal and private student loans to make repayment simpler, these options may affect your eligibility for loan forgiveness.

So before taking this direction, make sure to do your research to know the pros and cons of your individual situation. Having a clear picture of how loan consolidation works will allow you to manage your expectations and create solutions to potential problems in the future.

Pros of Federal Student Loan Consolidation

Convenience is the primary advantage you get by getting a Direct Consolidation Loan.

  • One monthly payment: Combining your federal student loans into one policy saves you the time and effort of making multiple payments on several loans.
  • Fixed interest rate: Federal student loan consolidation gives you a fixed interest rate, meaning your interest rate will remain the same throughout your loan policy’s term. You may also consolidate federal student loans with variable interest rates into your new policy with a fixed interest rate.
  • No minimum or maximum: There is no limit to the number of federal student loans you can consolidate.
  • Longer repayment time: You may extend your repayment plan to up to 30 years by getting a Direct Consolidation Loan, giving you more time to budget your loan dues.
  • Lower monthly payments: You may get more affordable monthly payments by extending your repayments.
  • Avoid loan default: With a new repayment schedule and potentially lower monthly payments, you have better chances of avoiding loan default. Defaulted loans affect your credit score, which determines your capacity to apply for other loans in the future.
  • More repayment plans: You get access to multiple income-driven repayment plans by applying for a Direct Consolidation Loan. As a loan under the Federal Direct Loan Program, Direct Consolidation Loans make you qualified for the Public Service Loan Forgiveness (PSLF) Program.

Cons of Federal Student Loan Consolidation

Losing the borrower benefits associated with separate federal student loans is the primary disadvantage of getting a Direct Consolidation Loan.

  • Lost benefits: Some individual federal student loans have specific benefits attached. Once you consolidate those federal student loans into a single policy, you essentially cancel the borrower benefits you get from them. Some benefits include interest rate discounts, principal refunds, and loan cancellation privileges.
  • Lost credit: Consolidating your federal student loans into a single policy may cancel any credit you earned when you made qualifying payments towards the PSLF Program or income-driven repayment plan forgiveness.
  • Outstanding interest: A Direct Consolidation Loan will accumulate any outstanding interest on your separate loans, meaning you may have to pay a higher principal balance.
  • Longer repayment time: Some borrowers may find the longer repayment period a disadvantage. Having more time to pay means you must set a budget for student loans for an extended period. In addition, you may end up paying more interest fees than you initially did on your principal balance, even if you have lower monthly payments.

Conclusion: How Long Does It Take To Consolidate Student Loans?

Expect up to 75 business days before you see your consolidated student loan payout. Consolidating student loans, whether they are federal or private, requires application and processing time.

You can apply for a Direct Consolidation Loan for your federal student loans online, which may take around 30 minutes to complete. Once you apply, your servicer may take between 30 and 75 days to complete the consolidation process, assuming you face no delays in the system.

Meanwhile, private student loan refinancing usually takes five days for application and an additional two or three weeks for processing. Each private lender has a unique system, so you might want to review your options before settling with one servicer.

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Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

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The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

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