 TITLE: Consolidating Student Loans: Should You Do It? CONTENT: Federal Student Loan Consolidation\n----------------------------------\nFederal student loan consolidation is, in most cases, a tactical move rather than a money-saving strategy. Here's when it makes sense:\n*   **You must consolidate to qualify for certain repayment programs.** If you have Federal Family Education Loans or PLUS loans, the government requires that you consolidate them into a direct consolidation loan to be eligible for some income-driven repayment plans. These plans lower your bill to a portion of your income. The same goes for the Public Service Loan Forgiveness program, known as PSLF, which provides loan forgiveness to public service workers after 120 qualifying payments.\n*   **Simplifying payments would prevent you from falling behind.** Consolidating federal loans gives you a single monthly payment. The downside, though, is that your interest rate will be the weighted average of your previous rates, rounded up to the next 1\/8 of 1%; it will not be reduced. Your outstanding interest also gets added to your balance, meaning interest will accrue on a bigger loan amount. That means it's worthwhile to consolidate to simplify payments only if you're currently at risk of missing them.\nYou can consolidate federal loans for free online. Here's how:\n*   **Choose the loans you want to consolidate.** You don't have to include all your federal loans in the new consolidation loan. Perkins loans, for instance, come with forgiveness benefits you'll lose if you consolidate them. Consider consolidating only your non-Perkins loans.\n*   **Choose a repayment plan.** If you're consolidating to qualify for an income-driven repayment plan or PSLF, pick a new repayment plan for your consolidation loan. To do so, you'll submit a separate income-driven repayment plan request form online, and you can ask the government to put you on the plan with the lowest monthly payment if you're not sure which to choose.\n*   **Submit a direct consolidation loan application online.** You can complete the application online in a single sitting—it generally takes about 30 minutes. View a sample version of the application in advance to make sure you have all documents ready beforehand. END