A student loan consolidation makes repayment seem more manageable because you only have one loan and one payment. You also have other ways for consolidating student loans such as a direct consolidation loan that offers many repayment options depending on your finances.
You can consolidate your student loan directly with the US Department of Education through a direct consolidation loan. They offer a number of payment options for you to choose.
If you need the flexibility to change your payment plan due to changes in your financial situation, the direct consolidation loan is what you need. It is designed for just his purpose.
Another repayment plan is called the standard repayment plan. With this plan you will settle on a fixed monthly amount until you have paid the balance in full. Your monthly payments can start out as low as $50.00 per month for 30 years depending on the amount you owe.
The extended repayment plan goes up to 25 years but to be eligible you have to have a loan amount that is more than $30,000. You can have a fixed monthly payment of $50 until you have paid off the whole loan or pay the interest first and settle the remaining amount later. For the latter option, your payment will start out very low and will increase every two years.
The income contingent repayment option determines your monthly payment based on your annual income, balance owed and the size of your family. The loan term may be extended for up to 25 years.
The direct consolidation loan does not have specific requirements for you to qualify, and there is no fee. You only have one lender to deal with which is the U.S. Education Department.
You now have all the information you need to know about the direct consolidation loan payment options. This should help you make a more informed decision about the program and let you compare with other consolidation loan programs that are available.
By: Ryan Wilkins
Posts Tagged ‘Direct Consolidation Loan’
Government Debt Consolidation Loans – Consolidate Your Federal Student Loan Debts
December 7th, 2009
Are your debts becoming too much of a burden for you? Well, your country can help you deal with this crisis in the form of government debt consolidation loans.
Although, there are many debt consolidation loans that you can consider to can help pay multiple creditors through a single monthly payment. Your best option still may be the several government backed debt consolidation loans that the federal government offers its citizens due to various reasons.
What are Government Debt Consolidation Loans?
These loans are made available by the federal government to help you pay multiple loans and creditors using similar principles of debt consolidation like any other private program. The loan allows you to consolidate multiple loans into one. This way you only need to make one single payment each month rather than three or four.
As you already know, in most cases the loans are high-interest unsecured ones; therefore converting them in to secured loans is bound to be beneficial for the borrower as it leads to low interest rates. They save you money and make your financial planning and budgeting easier.
Debt Consolidation for Federal Student Loans
Students who have multiple federal student loans to fund their educational expenses can benefit from government backed debt consolidation loans. Government backed loans help make repayment of the loans feasible for student or parents – without the hassle of having to deal with multiple loan payments every month.
There are many loans offered by the government that are designed to help out students. There are two programs under the Higher Education Act (HEA) which can allow consolidation loans. One program is Direct Consolidation Loan Program and the other is FFEL or Federal Family Education Loan program.
In the program, the Direct Consolidation Loan program, the US Department of Education helps students through debt consolidation loans to pay off education loans. After that, a new loan is issued to the student which contains the consolidated amount of all the old loans.
In case of the FFEL or Federal Family Education Loan Program, the borrower is provided with a new consolidation loan which can be used to pay off any loan that the student might have and not just educational loans.
Government Student Loan Repayment Plans
The government debt consolidation loan programs offer four different plans to the borrower, they are:
1. ICR or Income Contingent Repayment plan
2. Extended payment plan
3. Graduated payment plan and
4. Standard plan
Each plan provides the borrower with different features to meet the requirements of the individual. This provides flexibility which is a key factor in any debt consolidation program.
Consolidating your debts can help simplify your repayment process, as all of your existing loans may not have similar payment dates and terms. You pay back different types of loans with the help of one single loan. The amount that you would need to pay every month should be lower and the pay-back may also get stretched to ease the repayment process. At the end of it all, getting a government debt consolidation loan also increases the chances of paying back your loans on time.
By: Paul Sarwana
Student Loan Consolidation – The Long and Short of Consolidation Plans
December 6th, 2009
With tuition increasing at a rate greater than the cost of living, college students are depending more and more on student loans to help with the costs of higher education. Over the course of four or five years or longer in the case of graduate students, this adds up to many loans. Whether the loans are from the same lender or program or from different lenders and programs, most student loans can be consolidated under the Federal Direct Consolidation Loan. Consolidating your student loans can occur at any time after you take out your first student loan. The benefits, at least at the moment, are that you only pay one lender and there are several repayment plans to accommodate your financial situation.
Federal Student Loan Consolidation Plans
There are 4 consolidation loan repayment plans with fixed interest rates to choose from:
* Standard Repayment Plan:
The Standard repayment plan takes the shortest amount of time to repay. The interest is fixed and the monthly payments are fixed at a minimum of $50 for a maximum of 10 years.
* Extended Repayment Plan:
Under this plan the borrower pays fixed monthly payments that are less than the Standard plan. The repayment period can range anywhere from 12 to 30 years depending on the total amount borrowed. While the monthly payments are less, the total amount repaid is greater than the Standard plan because more interest accrues.
* Graduated Repayment Plan:
Another option that might work well for those who expect their income to increase gradually over time is the Graduated Repayment Plan. Rather than a fixed monthly payment for the duration of repayment, monthly payments increase every two years. Similar to the Extended plan, the repayment period varies from 12 to 30 years depending on the total amount borrowed
* Income Contingent Repayment Plan (ICR):
The Income Contingent Plan is more flexible than the other 3 plans because it considers the borrower’s adjusted gross income, family size and the total amount borrowed when calculating monthly payments. The repayment period is a maximum of
25 years. Any unpaid portion of the loan at that time is discharged, but taxes must be paid on the discharged amount.
When choosing a plan, consider your financial situation and what it might look like in the future. Paying off your student loans sooner may be the best option for you, but you may have other financial considerations to make and need to keep more of your hard earned money for your current living expenses. Whatever the case may be, look at each plan carefully and consider how it will affect you now and in the future.
By: Peter Livingston