Consolidating federal loan student

Debt consolidation: If you have taken student loans from different lenders and find it difficult in managing them and making regular monthly payments to each of the creditors, you may go for loan consolidation. By consolidating our individual loans into one single loan allows you to do only a single monthly payment instead of the several ones that you had been making otherwise. The student loan consolidation program sponsored by the U.S. government, known as Direct consolidation loan, is a good option to go for when you have federal loans with different interest rates. With Direct consolidation loans, the interest rates will be the same for the whole life period of the loan and it will be calculated on the basis of average interest rate of the individual loans that are to be consolidated.


Benefits of federal student loan consolidation :


Apart from the above mentioned benefit that consolidation your federal student loan goes a long way in helping you manage your debts better and easier, there are other advantages with student loan consolidation.


  • You dont have to deal with the individual creditors anymore as you will have to make payment to only one lender namely the U.S. Department of education.
  • When you choose Direct consolidation loan, you will have different plans of repayment to choose from as per to your liking. You will also be free to change your repayment plan whenever you wish to do so.
  • As the rate of interest on a consolidated loan will generally be lower than that of the individual loans, your monthly payment amount will be lesser that the amount you wouldve paid before consolidating your loans.
  • Student loans that can be consolidated:




    The following types of loans can be consolidated under Direct consolidation loan program.


    1. Direct subsidized and unsubsidized loans
    2. Federal Stafford loans
    3. Federal Perkins loans
    4. National Defense student loans
    5. Loans for disadvantaged students
    6. nursing student loans
    7. Health professions Student loans
    8. Direct PLUS loans Federal Consolidation loans
    9. Guaranteed Student loans
    10. Auxiliary loans to assist students

    Note: Loans such as private loans, loans issued by state governments and medical loans, though are not eligible for student loan consolidation, may be considered while determining the maximum period for the Graduated or extended repayment plan.


    Repayment plans: There are different plans for repayment to choose from, for repaying your Direct consolidation loan, which are designed to suit different interests and situations.


    1. Consolidated Standard Repayment Plan : According to this plan, you will have to pay regular monthly payments of $50 or above and will have to repay the whole consolidated federal student loan in a period of 10 to 30 years, depending on the amount you owe.
    2. Consolidated Graduated Repayment Plan : Under this plan, your monthly payments will be the least initially and will increase after every two years, with your minimum payment will be equal to your monthly interest. The consolidated student loan will have to be repaid in full in 10 -30 years period.
    3. Extended Fixed Repayment Plan: If you choose this plan, your minimum monthly payment will be $50 which will be fixed throughout the repayment period. The loan will have to be repaid completely within 25 years.
    4. Extended Graduated Repayment plan : According to this plan, the minimum monthly payment will at least be $50, or an amount equal to the monthly interest which will increase after every two years. To be eligible to choose this plan, your total loan amount should be at least $30,000.

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