Direct Loan Consolidation

Custom Search

 

We appreciate you taking the time to visit us today. The following pages form a basic guide about Direct Loan Consolidation and Federal Loan Consolidation. You will find an objective view of Direct Loan Consolidation and the related options that you have available to you when considering the sometimes difficult task of consolidating your student loans. If you have any questions about this information or site please do not hesitate to Contact Us.

"Direct Loans," or as they are more commonly known, William D. Ford Federal Direct Loan Programs (FDLP)" are United States Department of Education programs that provide loans and direct loan consolidation to help students pay for higher education. They are loans that the government makes directly to the student with no middleman (bank) involved. Recently, President Obama has made this the ONLY direct loan consolidation program available. Under this program you can participate in Direct Loan Consolidation, Federal Loan Consolidation or Education Loan Consolidation programs that are available. This may provide significant help to both current and former students.   

Here are some thoughts to consider before starting any Direct Loan Consolidation, Federal Loan Consolidation, or Private Loan Consolidation:
    
To be eligible for Direct Loan Consolidation, students are required to be responsible for a minimum of a single Direct Loan or Federal Family Education Loan (FFEL) currently in a grace period, repayment, deferment. Students with these types of loans that are currently default are also eligible for Direct Loan Consolidation. However, any loan that is currently being deferred because the student is still completing school is not eligible for Consolidation.  If you are still in college or just starting college and a loan consolidation program is not available for you, over 600,000 free scholarships are available for you Here.  Its a free sign up and well worth the effort, as a scholarship is money you never have to pay back.

Having a difficult time making your current payments? Have you exhausted deferment or forbearance leniences with your current Direct, Federal or Education loans? A Direct Loan Consolidation could save you from default. This simple step could also prevent a damaged credit score and quickly reduce your monthly payments. If your credit has already been damaged by non-payment, do not despair.You will find some help Here.

How many monthly payments do you have? Many students in repayment have two, three or even four. Are the multiple payment dates from a Direct, Federal or private loan becoming a headache? Are they causing bank account balance to overdraft? The freedom of only one payment every month from a Direct Loan Consolidation may work for you and your bank account. With a Direct Loan Consolidation, there will be only one lender, the United States Education Department. 

What type of interest rates do you have on your Direct, Federal or Education Loan? If your interest rate is variable, consolidation may be for you. The set rate of interest on a Direct Consolidation Loan is set at the same percentage during the entire term of the loan's consolidation.

The direct loan consolidation rate will be set according to the average rate of interest associated with the loans subject to consolidation. However, these interest rates are rounded to the nearest higher 1/8 of 1% and cannot pass 8.25%. However, rates are scheduled to change on July 1st of this year.

Current or former students who do not have a Direct Loan might also be allowed to consolidate their Direct Loans. However, they must be responsible for a minimum of a single FFEL Loan and have not been able to osecure a Federal Loan Consolidation from a FFEL lender for the purpose of consolidation. They may also be eligible for a Direct Loan Consolidation if they have been unable to obtain a Federal Loan Consolidation with income-linked repayment terms that work for them. Finally, anyone that intends to fill out an application for forgiveness of loans from a forgiveness program for public service loans can also apply for such a loan consolidation.

Borrowers who only have a Direct Loan Consolidation cannot consolidate again unless they include an additional loan.

All this sounds great, right? Well, sometimes it is and sometimes it is not. This is a key point in considering a Direct Loan Consolidation.  Read the next few paragraphs carefully and consider all your options.  

What amount of the loan can you handle over a long period of time? Much like any loan, increasing the amount of time associated with the repayment of the loan, by default, raises the amount of money that you have to repay through interest

If you have multiple loans and are currently making your payments on time, a plan called "debt stacking" will often allow you to pay off  your loans faster. It's very simple. Just pick the student loan with the lowest balance and pay as much as you can on that loan to pay it off sooner. Meanwhile, refinance larger loans at lower rates, if possible. If there are any monthly savings, apply the savings to the lower balance loan. How does that work? The goal is to pay the lower balance off as soon as possible. Then, you "stack" the payment you were making to the smaller loan on the larger loan. You will be amazed by how fast you can pay off multiple loans this way.   

However, you should take into account the amount of time left in your loan repayment. The closer that you are to completing the repayment of your loans, the less worthwhile it is to consolidate or increase the length of time during which you are making payment.