Consolidation usually gives you more repayment options, but it can limit them too.
Consolidation is often the first step borrowers must take to enroll in some of the government's more flexible repayment plans, including income-driven plans, many of which are restricted to borrowers with Direct Loans.
Borrowers sometimes use the terms "consolidate" and "refinance" interchangeably when talking about their federal loans. You can consolidate but not refinance your federal loans within the federal system—to refinance, you have to go to a private lender.
Once you leave the federal program, you can't return and are no longer eligible for one of its income-driven repayment plans.
Private consolidation is a completely different story, though.
Consolidation also opens up the door to extended repayment plans, in which your term can stretch up to 30 years depending on how much debt you have.
Consolidation doesn't always work to your benefit, however.
Many students will get federal loans for each year in school and will graduate with more than one loan to repay. Department of Education, a Direct Consolidation Loan can help you streamline your federal loan payments.