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 ‘Us Department Of Education’
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 Debt Consolidation – An Overview
October 23rd, 2009
There are a number of student loans and can be categorized into two main types: Federal Student Loans and Private Student Loans. The Federal student loans are disbursed through the US Department of Education’s Federal Student Aid programs, and are the easiest to obtain. The private student loans are obtained from standard lending institutions and banks, among others. You can use both types of loans to fund your education, but when it comes to your Student Loan Debt Consolidation, never mix up the two together.
Start by consolidating your Federal student loans first. The benefits of student loan debt consolidation of your Federal loans is that:
• The rate of interest is lower
• It reduces your monthly payments as the term of loan repayment is increased to 30 years, depending on the loan balance
• The repayment is consolidated to a single check payment each month.
You are eligible to go for your student loan debt consolidation of your Federal loans when you are not enrolled in school any longer; you are actively repaying your loan or are in your six-month post-graduate grace period; you have a minimum loan amount of $10,000.
The reason why you should never mix up the Federal and private loans during student loan debt consolidation is that the interest on Federal loans is tax deductible; you can defer payments when you go back to school; and the loan is forgiven for certain types of service. Private students loans do not have these advantages as they are treated just as normal loans. Mixing up the Federal and private loans during student loan debt consolidation makes you lose all the benefits of the Federal loans consolidation.
Go for student loan debt consolidation to lower your debt burden, as once you have graduated you have to start paying back your loans.
By: Gibran Selman