I am a couple weeks away from graduating with my MSW (social work). I have about $13,000 in subsidized loans from undergrad, $8,500 subsidized from grad school, and about $20,000 in unsubsidized from grad school.

While I would like to apply for the Public service loan forgiveness program I am trying to determine if consolidation into a direct loan is wise. I have read a lot of information about consolidation, but I still do not quite understand the interest aspect of the whole process.

With Subsidized loans the government pays your interest off, correct? With unsubsidized loans, students pay all of their interest?

If this is true, what happens with the interest if the loans are consolidated? Will I then pay all of the interest? Is it possible to have more than one direct consolidation loans (one with subsidized loans, the other without?).

My partner and I are planning to get married soon and he also has federal subsidized loans. When we get married is it better to consolidate them all together?

Any advice or direction is appreciated :)

PS. Thank you for having this site!

I love social workers!  My sister AND my BFF are both social workers.

OK.  First of all you can’t consolidate with a spouse anymore (thankfully because it was never a good idea).

Subsidized loans means the government covers the interest but ONLY during certain periods of deferment (like when you are in school) and during other narrow circumstances.  So subsidized is better than unsubsidized but a lot of the benefit of the subsidy is before you leave school and only under narrow circumstances post graduation.  Subsidized undergrad loans may also be a lower interest rate than unsubsidized loans (depends on when you borrowed).

In any event, if both subsidized and unsubsidized loans are consolidated, the loan servicer still tracks which portion of the consolidation loan is subsidized, so you don’t lose the benefit of the subsidy by consolidating.

The interest rate on a consolidation loan is the weighted average of the underlying loans rounded up 1/8th of 1 percent and capped at 8.25%.  More on what that means here: https://loanconsolidation.ed.gov/loancalc/servlet/Controller?controller_task=startCalculator

And ONLY federal Direct Loans are eligible for Public Service Loan Forgiveness so IF you have older federal loans from the FFEL program, consolidation is an absolute must for PSLF.  Otherwise, you may not need or want to consolidate.  More on that here: http://askheatherjarvis.com/blog/the-scoop-on-student-loan-consolidation

Hi Heather..
I just recently graduated with my Masters degree.  I’ve accumulated unsubsidized and subsidized loans for my graduate program.  I also have an undergraduate loan at 3% interest.  I don’t know if it would be better to consolidate all loans?  I have about 4x as much graduate loans at this time.

Hi Skjl.  This is James (Heather’s Communications Director and husband).  Here’s the scoop on consolidating your loans: http://askheatherjarvis.com/blog/the-scoop-on-student-loan-consolidation.  Hope this helps answer your questions.

Best, James