When a student approaches a debt consolidator, he/she would take some money from the student and put it into an escrow account. When sufficient amount of money is built up in this account, then the consolidator would initiate talks with the creditors and request them to lower their rates of interest. Once this is done (and if it is done), the consolidator will pay off their debts from the escrow. The student will then have to pay back only to the consolidating agent.

Schools themselves come forward sometimes and suggest names of reputable debt consolidating agencies to their students. Or else, the government also helps in consolidation, provided the loans are federal loans. This is done by referring the student to a debt consolidator.