A consolidation loan combines several loans with repayment schedules into one bigger loan from a single lender. Married borrowers may consolidate their individual loans under a single payment schedule. Consolidation loans are usually for federal loans, but some lenders offer consolidation for private loans as well. The advantages are that you only have to make one monthly payment at a fixed interest rate with an extended repayment term. The interest rate may be lower than what you are currently paying on one or more of your loans, however, the longer you extend the payment plan, the more the interest may be.

Loan consolidation is not the same as combining loans with one lender. Combining loans means asking one lender to buy any loans you have with another lender so that you can get them all serviced in one place. This means you would still have multiple loans. Serialization is also something different. Serialization is when you borrow all subsequent loans from your original lender.

The details, advantages, and draw-backs will vary with each borrower. Get all the facts before opting for a consolidation loan. You may have to relinquish your deferment or repayment options and the new loan obligates you to new terms.