Borrowers with multiple federal student loans may struggle to keep up with multiple payments per month.

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To streamline the process, borrowers have the option of consolidating some or all of their student loans in one. Rather than multiple loans with different interest rates, borrowers who consolidate all of their student loans would have one monthly payment at a fixed interest rate.

However, consolidation is not for all borrowers, so here are some factors to consider before applying for a federal direct consolidation loan.

Eligible Types of Federal Student Loans

Borrowers must have the right type of student loans to qualify for consolidation. Most federal student loans qualify, including:

— Subsidized, Unsubsidized, and Unsubsidized Federal Stafford Loans

— Direct PLUS Loans

— Additional student loans

— Perkins Federal Loans

— Nursing student loans

— Loans of nursing professors

— Loans to support health education

— Health Professions Student Loans

— Loans for disadvantaged students

— Subsidized and unsubsidized direct loans

— PLUS loans from the Federal Family Education Loans Program

— Certain FFEL consolidation loans and direct consolidation loans

— Federally insured student loans

— Guaranteed student loans

— National Direct Student Loans

— National Defense Student Loans

— Parent loans for undergraduate students

— Auxiliary loans to help students

[Read: Understanding the Types of Federal Student Loans Available.]

“There is always an opportunity to eventually consolidate student loans with a private lender,” says Jeff Arevalo, financial wellness expert at GreenPath Financial Wellness. “But the thing to keep in mind is that the borrower’s credit and debt to income ratios are going to come into play for this. And if you consolidate into some type of private lending product, you risk losing some of those protections and flexibility you have while still under the federal umbrella.

According to the U.S. Department of Education, borrowers who can consolidate may also lose certain benefits, such as principal discounts, loan forgiveness, or interest rate reductions.

Should I consolidate my federal student loans?

Consolidation is advantageous for borrowers interested in federal Cancellation of civil service loans program.

To be eligible for the program previously, borrowers had to be employed full-time by a U.S. federal, state, local, or tribal government or nonprofit organization in eligible employment; have direct loans; be on an income-based repayment plan and make 120 qualifying payments. But due to the implementation of the PSLF Limited Waiver on October 6, 2021, any prior repayment period is now temporarily eligible for the PSLF, regardless of the loan program.

All non-direct federal student loans, such as FFEL program loans or Perkins loans, must be consolidated into the direct loans program before the limited waiver expires on October 31, 2022.

Under ordinary circumstances, federal student loan consolidation erases any progress a borrower has made toward the PSLF by restarting the clock. Essentially, previous qualifying payments made for student loan forgiveness no longer count.

Consolidation also offers borrowers the option of changing their student loan officer, experts say. It can also lower monthly payments by giving borrowers up to 30 years to repay their loans.

Although borrowers can increase the repayment term, their interest rates could be higher. Taking longer to pay off the loan usually means more money being paid in interest over time.

[Read: How Your Existing Student Loan Debt Affects Graduate School Options.]

Under the current federal student loan payment suspension that began in March 2020 with the enactment of the federal CARES Act, the interest rate for direct consolidation loans is 0%. But when repayment resumes after December 31, 2022, all direct consolidation loans will have a fixed interest rate, which will be determined by the weighted average of the statutory interest rates on the consolidated loans rounded to the nearest eighth of 1. . %. And there will be no cap on the consolidation loan interest rate.

When deciding whether or not to apply for a consolidation loan, consider the interest you’ll pay “vs. what you were paying,” says Dan Claffey, director of EdMD, a college admissions and financial aid consulting firm.

“It can be hard for people to understand when you have eight different loans at eight different interest rates with eight different balances,” Claffey says. “Borrowers should make sure they compare these numbers themselves before jumping in and assuming they’re going to save money because they’re looking at the payment.”

Another important consideration is that if you are consolidating, any interest due on the loans to be consolidated will be added to the principal of your consolidation loan. It’s called capitalization and means that interest will have to be paid on a higher principal balance than would have been the case if you had not consolidated.

It is also important to note that federal student loans in default can be consolidated and, in some cases, reconsolidated.

How to Apply for Federal Student Loan Consolidation

There is no credit check to qualify for consolidation, and there are no application fees.

Borrowers can apply directly through Federal Student Aid website or download and print a paper application to be mailed to the chosen consolidation agent. These service options currently include Aidvantage, Great Lakes Educational Loan Services, HESC/EdFinancial, MOHELA, Nelnet and OSLA Servicing.

Be prepared to enter personal information, including a phone number and email address, as well as financial information such as account statements, invoices, and student loan records. You must have a verified FSA ID.

[Read: See How Average Student Loan Debt Has Changed in 10 Years.]

You will also be asked to indicate the loans you wish to consolidate and to select a repayment plan. The processing of your application may be delayed if one of the loans chosen for consolidation is in the grace period.

The form, which is free to complete, takes an average of 30 minutes or less, according to the Department of Education. After consolidation, borrowers will have only one monthly payment.

The request is timestamped. As long as borrowers submit it by October 31, they will still be eligible for the limited waiver even if it is not processed by that date.

“Consolidation is taking a little longer than normal due to Biden’s recent pardon announcement,” said Jan Miller, president of Miller Student Loan Consulting, LLC. “Be patient.”

In August, President Joe Biden announced plans forgive up to $10,000 in federal student loans for those earning less than $125,000 a year and up to $20,000 for borrowers who had a PellGrant while he was in college.

Who do I contact if I need help?

Borrowers who have questions about federal student loan consolidation can contact the Federal Student Aid Information Center, known as FSAIC, which provides support on behalf of the Ministry of Education. The FSAIC helpline number is 800-433-3243.

But the best point of contact, experts say, are your student loan managers.

“They’re the ones doing the consolidations and that’s who borrowers should go to,” says Claffey. “Not a third party mailing them something or sending them a solicitation email.”

Are you trying to finance your studies? Get tips and more at US News’ Paying for College hub.

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A Guide to Consolidating Federal Direct Student Loans originally appeared on usnews.com