Federal student loan consolidation plans for the student!
Federal consolidation or direct student loan consolidation allows a student to club all the federal loans under the same umbrella to help the student to make payments.
What are the benefits of consolidating the loans under the same umbrella?
1. By giving all your loans to one lender you are able to coordinate payments to a single person there is no chance of forgetting any payments, of sending them in late. With only one lender and one monthly bill, it is much simpler for a busy student to manage his debt. Borrowers have only one lender that is the U.S. Department of Education for credits included in a Direct Consolidation Loan
2. There are a large range of payback options which are individually tailored to help the student in making payments easier. The student can choose from four different plans to repay their Direct Consolidation Loan, including an Income Contingent Repayment Plan which is tailored to the studentâ€™s income at the specific time of payment. With a Direct Consolidation Loan, borrowers can changes in between plans to their convenience at anytime.
3. There is no minimum or maximum limit to the loan amounts which have to be included in the loan.
4. Consolidation of all your federal loans is free of charge
5. There is an option of deferment of your loan, if you cannot payback at that particular time.
6. Reduces Monthly Payments by relieving the strain on a borrower’s budget which lowers the student’s general monthly payment. The lowest monthly payment on a Direct Consolidation Loan may be lesser than the united cost charged on the students Federal education loans.
7. There are two likely possibilities to a Direct Consolidation Loan which are that the student may hold on to the subsidy benefits on loans that are consolidated into the subsidized fraction of a Direct Consolidation Loan.
Stake out the market! Who is eligible for a Direct Consolidation Loan?
To qualify for Direct Consolidation Loans or Federal Student Loan Consolidation,
1. Students must have one or more Direct Loan or Federal Family Education Loan Program loan that is in grace, repayment, deferment, or default.
2. Borrowers can consolidate almost all defaulted and Direct Loan Program loans, if they make satisfactory repayment arrangements to pay the new Direct Consolidation Loan under the Income Contingent Repayment Plan.
3. Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan if they include at least one Federal Family Education Loan Program Loan and have been unable to obtain a Federal Consolidation Loan with a Federal Family Education Loan Program consolidation lender or have been unable to obtain a Federal Consolidation Loan with repayment terms acceptable to them.
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How long does it take to consolidate my loans after I submit my application?
The consolidation procedure usually takes 60-90 days. The student can use the secure online form to put in the application for consolidating the loans. Borrowers receive a billing statement once a month from the Direct Loan Servicing Center. But if the student enrolls in the Electronic Debit Account they receive a 0.25 percent discount on their interest rate, (as long as they continue to make payments using EDA)
Federal student loan consolidation is a good option for students who are not really used to managing their finances. Itâ€™s also better to consolidate your loan to prevent a potential default which can hurt you financially forever.