Student Loans and Direct Consolidation

2007-03-08 10:33:40

( Financial )



Direct consolidation loans make it possible for you to combine many federal loans into one new loan. You will have one lender (usually a government institution). Also, you will only have to worry about one interest rate and one monthly payment.

One of the most important functions of direct consolidation is to consolidate student loans. Direct consolidation loans are specifically designed to help students and their parents make their loan payments. The consolidation service itself is free.

A direct consolidation loan pays off all your loans and creates a new, unified loan. It offers a simplified payment scheme, as well as flexible payment options. Oftentimes, the interest on a direct consolidation loan is much lower than current interest rates, thus rendering the debt more manageable. Usually, there are no minimum or maximum loan amounts. Even if you are in default on a federal student loan, you can acquire a student consolidation loan as long as you promise to make suitable arrangements to pay off your debt, usually on a staggered basis.

How can I get a Direct Consolidation Loan?

You can get a direct consolidation loan while you are still enrolled in school. Schools typically have a program that allows you to participate in a direct consolidation program.

The following loans can be consolidated: subsidized student loans, unsubsidized student loans, guaranteed student loans, federal insured student loans, federal supplemental loans, health related education loans, health educated assistance loans, loans for disadvantaged students, and prior direct consolidation loans.

Direct consolidation lenders are required by law to offer a variety of repayment schedules. There are four repayment schedules available: a standard repayment plan, an extended prepayment plan, a graduated repayment plan, and an income-sensitive repayment plan. Depending on the lender, the details of each plan may differ. If you are heavily in debt, however, you might want to look into the graduated and income sensitive repayment plans more closely. Graduated plans start with very low payments that only increase every two years. Income sensitive plans, on the other hand, compute your monthly payments based on your income and family size; it also takes about 25 years to repay. That means that you can choose the repayment plan that best suits your financial circumstances.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.