By putting all student loans together in one place, Federal consolidation and direct student loan permits students to have only one single payment rather than many.
So how can you benefit from consolidating your loans into one single loan?
1) By consolidating all your student debt into one loan, there’s less chance of missing any payments simply by forgetting one is due.
With just one lender and one payment, you will find your finances are much easier to manage.
2) There are many payback options which can be individually modified to suit each student.
With a Direct Consolidation Loan, you can choose from 4 different repayment methods, including what is called a Income Contingent Repayment Plan’ which will be modified to suit your financial circumstances at the time of taking out the loan.
There is no minimum or maximum amount of loan.
3) Consolidating your federal loans is free
4) You may be given the option to defer your loan and therefore pay it back at a later date.
This can also reduce your monthly repayments.
5) The monthly payments on a Direct Consolidation Loan may well be less than the combined sum of other Federal education loans.
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Am I eligible for a Direct Consolidation Loan?
1) In order to qualify for Direct Consolidation Loans or for a Federal Student Loan Consolidation, a student must already have one or more Direct Loan or Federal Family Education Loan Program loan that is in effect, even if it’s been deferred or is in default.
2) A borrower may consolidate almost all debt from Direct Loan Program loans as long as the borrower makes satisfactory arrangements to repay to the new Direct Consolidation Loan under the Income Contingent Repayment Plan.
3) Students who don’t have Direct Loans may still be eligible for a Direct Consolidation Loan as long as they have at least one Federal Family Education Loan Program Loan and were unable to get a Federal Consolidation Loan with a Federal Family Education Loan Program consolidation company or couldn’t get a Federal Consolidation Loan with repayment terms that were acceptable.
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So, how long will it take to consolidate my loans once I’ve submitted my application?
The consolidation loan procedure generally takes from 60 to 90 days.
The student can use the secure online form to apply for a consolidation loan.
Students will receive a billing statement monthly from the Direct Loan Servicing Center.
Federal student loan consolidation is a worthwhile measure for students who aren’t familiar with managing their own finances.
It’s also better to consolidate a loan to prevent potentially defaulting which can damage your credit file.