Dec 01 2009
Direct Student Loan Consolidation – What You Need to Know
Most people want a good education. Today this is a costly prospect as the prices that colleges charge seem to increase every year. It is one thing to be able to acquire a loan for education but the headaches can begin after graduation when it comes to paying back the loan or loans. If you believe that you are going to have problems making the repayments then it is worth considering a direct student loan consolidation.
This is a service that offers a solution in which you are given a new loan that is more manageable. It helps to alleviate any stress and worry involved with student debt. Also it improves the credit rating of the graduate thereby allowing them access to other financial services.
The program has been set up and is administered by the Department of Education. As it is a federal government scheme you can be assured of professional treatment at all times.
In essence the federal government recalculates all the individual student loans that you have taken into one loan that is easy to understand and repay. It has a fixed interest rate for the full term which is worked out by the average of all the individual loans that you had. There is a limit on this rate which is currently set at 8. 25%. It is much easier to keep track of your dues and payments using this method.
Often by consolidating your loans in this manner, the payback duration is extended far greater than on individual loans. In some cases it can be as long as thirty years. To qualify for a direct consolidated loan you must already have one or more loans that need repaying. There is no fixed minimum amount of debt that needs to be held to be eligible fro the scheme.
Currently, there are 4 repayment plan options available. It is vital to choose the one which is right for your needs and requirements -
1. Standard Repayment Plan: If you choose this option your monthly repayments will be a minimum of $50 per calendar month for between ten to thirty years.
2. Graduated Repayment Plan: This is different than the standard option in that the monthly repayments have to be at least equal to the interest accrued. To start with the amount can be low and it will be re-evaluated every 2 years.
3. Extended Repayment Plan: To be eligible for this option your debt must stand at an amount greater than $30, 000 and you are given up to 25 years to pay it all back.
4. Income Contingent Repayment Plan: This option is calculated by taking into factor your yearly income, family size, and the balance of the old loans.
What is the best education loan consolidation company? How do you apply for easy student loans? Visit Pay-Off-Student-Loan.com to get the answers you need.