Consolidating federal loans under the 2026 rules

A Direct Consolidation Loan made on or after July 1, 2026 is a new loan, and that one fact decides most consolidation questions now. It can be repaid only under the Repayment Assistance Plan or the Tiered Standard plan, and taking it also pushes every other Direct Loan you hold onto those two plans. If IBR or the 10-year Standard plan is your best option today, consolidating takes it away permanently.

The law is section 455(g)(3) of the Higher Education Act, added by Public Law 119-21: a consolidation loan offered on or after July 1, 2026 “may only be repaid” under those two plans. Studentaid.gov’s consolidation page adds that this applies to “all of your Direct Loans, including any Direct Loans you received before July 1, 2026.”

When consolidation still makes sense

• You have FFEL or Perkins loans and want PSLF or RAP. Neither counts until it’s inside a Direct Consolidation Loan. If you’re heading for PSLF and RAP is a reasonable payment for you, consolidating is how you start the clock on those loans.
• You’re in default and want out fast. Consolidation clears the default once the application is processed, where rehabilitation takes nine months of payments. The default stays on your credit report, though. Compare the two.
• RAP or Tiered Standard was going to be your plan anyway, and you want one payment and one servicer.

When it’s a mistake

• IBR is cheaper for you than RAP. That’s common at lower incomes and in larger households, because IBR ignores income up to 150% of the poverty line and RAP doesn’t. Once you consolidate, IBR is gone.
• You’re working toward PSLF on IBR. After consolidating, Tiered Standard becomes your default and never counts for PSLF, so RAP is your only PSLF plan.
• You want to mix Parent PLUS and your own loans. It’s allowed, but a consolidation made on or after July 1, 2026 that includes a Parent PLUS loan is limited to Tiered Standard, so your own loans would lose RAP and PSLF too. Studentaid.gov advises consolidating them separately. (A parent’s PLUS loans can never be combined with the student’s own loans.)
• You hoped for a lower rate. The rate is the weighted average of your current rates, rounded up to the nearest one-eighth of a point. Example: $20,000 at 5.05% (an undergraduate loan from 2018-19) and $30,000 at 6.54% (a graduate loan from 2022-23), rates from Federal Student Aid’s chart in 91 FR 10084, averages 5.944%, which rounds up to 6.000%.

What happens to your numbers

Unpaid interest on the loans you consolidate becomes principal on the new loan, so you start paying interest on it. The consolidation can’t be undone; the old loans are paid off and gone.

For PSLF, studentaid.gov says qualifying payments on the Direct Loans inside a consolidation (made on or after September 1, 2024) are credited as a weighted average by balance. Payments on FFEL or Perkins loans don’t carry over. For RAP’s 30-year forgiveness clock, how earlier credit carries into a post-July-2026 consolidation isn’t spelled out on the pages we read; ask your servicer for your count before you apply.

How to apply

Apply free on studentaid.gov. There’s no application fee.

Before you do, put your loans into the calculator twice: once with your current loan dates, once with “at least one loan paid out on or after July 1, 2026”. The difference between the two is what consolidation costs or saves you.