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vns_fish swim against the norm
For new graduates who borrowed money from the United States government to pay for school, standard advice over the years has been, for varying reasons, to consolidate their student loans into a single loan.
This year, the word to the wise is the opposite: Don't consolidate.
This graduation season comes on the cusp of big changes in U.S. education financing. Effective July 1, first-time borrowers face new limits on how much they can borrow and have far fewer choices among repayment plans.
While graduates aren't affected by the borrowing caps — provided they don't return to school — those who take a new federal Direct Loan after July 1 will fall under the new rules governing repayment options. Federal consolidation loans are a type of Direct Loan.
Borrowers who don't take a new Direct Loan are grandfathered in, retaining access to repayment plans that are being phased out.
With that shift coming in less than three weeks, the chance of a new consolidation application being processed and finished before then is effectively zero, according to Dr. Tony Bartels, a student debt educator at the VIN Foundation, the nonprofit arm of an online community for the profession, the Veterinary Information Network.
Bartels wrote in a blog post that it was "logistically improbable" that most 2026 graduates would be able to pull off loan consolidation before July 1, given the short interval between their graduation date and the deadline. He explained that consolidations "take 30 to 60 days to complete in the best of times."
In an interview, Bartels noted that most new graduates don't think about managing their student loans until halfway through the six-month grace period they're given before they must begin repayment. Fortunately, doing nothing now is exactly what is advised to preserve their repayment options.
Preserving options is important for borrowers who plan to use income-driven repayment plans, whereby the amount due each month is based on the borrower's income. Such plans are a lifeline for those whose debt exceeds their annual income, which includes most new veterinarians.
American Veterinary Medical Association figures show that four out of five veterinary students graduate with debt. In 2025, that debt averaged about $212,500, and the average starting salary of those who entered full-time companion animal practice (where the majority are employed) was $140,000.
Under income-driven repayment, borrowers who pay on time for a certain number of years can have any remaining balances forgiven. The specified repayment periods are longer than those of a standard repayment plan.
Until now, the federal government has offered multiple income-driven plans — close to a half-dozen, depending on how you count. They vary in eligibility criteria and terms.
As of July 1, a new plan called the Repayment Assistance Plan, or RAP, will debut, and it will be the only income-driven plan available to anyone who receives a new Direct Loan from then on.
RAP has the longest repayment period of any income-driven plan — 30 years. That's why Bartels and other student debt advisers recommend new graduates preserve their "legacy borrower" status — so they can, if they wish, access plans with shorter repayment horizons.
For example, a plan called Income-Based Repayment, or IBR, that became available in 2014, is, in Bartels' book, "one of the most beneficial" choices for borrowers because of how its minimum monthly payment is calculated and because the repayment period is 20 years. That's a full decade shorter than RAP's.
Judging from thousands of repayment simulations Bartels and his team have run in assisting veterinarians who borrowed for school, he believes anyone with a debt-to-income ratio greater than 1-to-1 probably will benefit by preserving their access to IBR 2014.
"It's a significant option to maintain in your quiver of options, hence the reason to avoid consolidation," Bartels said.
Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit organization, said consolidation afforded borrowers certain distinct benefits a few years ago, but that's no longer the case. "It doesn't make them eligible for other plans and ... it will now actually reduce the number of plans they are eligible for," Mayotte said by email.
Another good reason for 2026 graduates to skip consolidation, Bartels said, is that the unpaid interest on their loans won't capitalize — that is, the interest won't be added to the principal balance, an action that results in the borrower being charged interest on the interest.
The ability to avoid capitalization didn't always exist. Until three years ago, interest on unsubsidized Direct Loans — the type of loans taken by most veterinary students — capitalized whether the borrower consolidated or not, according to Bartels. Today, new graduates have a choice: consolidate and capitalize their unpaid interest or forgo consolidation and prevent capitalization.
Between those choices, adding interest to the principal is more costly in the long run. The higher the principal, the more interest accrues during repayment.
For a sense of the scale, consider that a 2026 graduate who borrowed $200,000 in Direct Loans for veterinary school would have at least $25,000 in unpaid interest upon graduation and accrue more than $1,200 in interest per month after graduating, according to Bartels' calculations.
Some perks of loan consolidation remain, Bartels said. For example, borrowers of federal non-Direct Loans such as the Health Professions Student Loan can, by consolidating, make those loans eligible for Direct Loan repayment options and benefits. But for the 2026 graduating class specifically, he said, the pros of consolidating are outweighed by the cons of losing access to legacy income-driven plans and triggering interest capitalization.
After this graduation season, the calculation shifts again. Those finishing school in 2027 and beyond, assuming they receive new Direct Loans on or after July 1 of this year, will not be able to tap legacy repayment plans in any case. That means there will not be the same caution against consolidating.
An ongoing strike against consolidating, though, is that it still will result in interest capitalization. Deciding whether to consolidate has always been a matter of weighing the advantages and disadvantages, and that will continue as new variables arise, Bartels said, noting, "If past is any prologue, we're quite likely to see more changes in the future."