With a diploma in one hand and a student loan in the other, some graduates find themselves facing financial anxiety soon after commencement day.
Students should be sure to consider all of their appropriate options. You can consolidate your loans at any time, for example, while you're still in school, during your six-month grace period or after you begin repayment.
You may be able to combine your existing Federal education loans into one new consolidated loan that offers several advantages. At any rate, students should be sure to research the options they have and make an informed decision.
Federal Direct Consolidation Loans
The federal government offers a Federal Direct Consolidation Loan opportunit for students, described in the following article:
Here are some factors you should consider
Are your monthly payments manageable? - If you have trouble meeting your monthly payments, have exhausted your deferment and forbearance options, and/or want to avoid default, a Direct Consolidation Loan may help you.
Too many monthly payments driving you crazy? - If you send payments to more than one lender every month, and want the convenience of a single monthly payment, consolidation may be right for you. With a Direct Consolidation Loan, you will have a single lender - the U.S. Department of Education - and a single monthly payment.
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What are the interest rates on your loans? - If you have variable interest rates on your Federal education loans, you may want to consolidate. The interest rate for a Direct Consolidation Loan is fixed for the life of the Direct Consolidation Loan. The rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next nearest higher one-eighth of one percent and can not exceed 8.25 percent.
How much are you willing to pay over the long term? - Like a home mortgage or a car loan, extending the years of repayment increases the total amount you have to repay.
How many payments do you have left on your loans? If you are close to paying off your student loans, it may not be worth the effort to consolidate or extend your payments.
Some loans are always ineligible for consolidation. While these loans may not be included in a Direct Consolidation Loan, they may be considered in the calculation of the maximum repayment period under the Graduated or Extended Repayment Plan. These include but are not limited to the following:
[ Source : US Department of Education ]