Student Loan Consolidation

A Student Loan Consolidation is called a Federal Direct Consolidation Loan. Direct Consolidation Loan means the process of combining one or more of your outstanding federal educational loans into a new, single, but larger, manageable loan. If you find that repaying your student loans are overwhelming and you are having a hard time making ends meet, you may want to apply for a Direct Consolidation Loan. Here are some factors you should consider when deciding if consolidation is right for you:
1. What are the interest rates on the loans you have now? (If a Direct Consolidation Loan offers you a lower rate than your current loans, you may want to consolidate)
2. Are you having trouble making your monthly payments? (With a Direct Consolidation Loan, you would have one lower monthly payment)
3. How much are you willing to pay over the long term? (Extending the years of repayment increases the total amount you have to repay)
4. How many payments do you have left on your loans? (If you are close to paying off your student loans, you may not need to consolidate)
5. What consolidation loan benefits do your current lenders offer? (Check with the loan holders currently servicing your loans to see if they can offer terms and repayment plans that meet your needs better than a Direct Consolidation Loan)

Advantages of a Direct Consolidation Loan:
1. Lower Interest Rate For In-School and In-Grace Consolidation
2. One Lender and One Monthly Payment (The lender is the U.S. Department of Education)
3. Flexible Repayment Options (With a Direct Consolidation Loan, you can switch repayment plans at anytime)
4. Grace Period (If you consolidate while in-school, you may receive a 6-month grace period before repayment begins)
5. No Minimum or Maximum Loan Amounts or Fees (It doesn't matter how much your loan debt is, and, consolidation is free)
6. Varied Deferment Options (A deferment is a temporary suspension of a borrower's monthly loan payment, there are many different types of deferments available)
7. Reduced Monthly Payments (A Direct Consolidation Loan may lower your monthly payment)
8. Retention of Subsidy Benefits (You will keep any subsidies (financial assistance given by the government) on your old loans)

The consolidation process generally takes 60-90 days. Using the online Web application is quicker. Unless you are obtaining an in-school consolidation, you can expect to receive the first bill from the Direct Loan Servicing Center within 60 days of the first disbursement of the Direct Consolidation Loan. Borrowers with an in-school consolidation loan begin repayment after their six-month grace period expires. You will receive a monthly billing statement from the Direct Loan Servicing Center, unless the borrower is repaying the Direct Consolidation Loan using Electronic Debit Account (EDA). Borrowers who choose to repay using Electronic Debit Account (EDA) will receive a .25 percent discount on their interest rate for as long as they continue to make payments this way. You can prepay all or part of the unpaid balance on any Direct Loan at any time, without an early repayment penalty.

Eligible Loans:
The following federal education loans are eligible for consolidation into a Direct Consolidation Loan:

Direct Subsidized and Unsubsidized Loans
Federal Subsidized and Unsubsidized Federal Stafford Loans
Direct PLUS Loans and Federal PLUS Loans *
Direct Consolidation Loans and Federal Consolidation Loans
Guaranteed Student Loans
Federal Insured Student Loans
Federal Supplemental Loans for Students
Auxiliary Loans to Assist Students
Federal Perkins Loans
National Direct Student Loans
National Defense Student Loans
Health Education Assistance Loans
Health Professions Student Loans
Loans for Disadvantaged Students
Nursing Student Loans
* PLUS loans are eligible for in-school consolidation only if the parent borrower also includes other eligible, non-PLUS loans in an in school period.

To apply for a Federal Direct Consolidation Loan go to:
www.loanconsolidation.ed.gov/borrower/bapply.shtml

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