Direct Student Loan Consolidation!

There is a new program for direct student loan consolidation called ‘Pay as You Earn Repayment Plan’! How to apply it? Read more!

What is direct student loan consolidation – it this your option? Nowadays, consolidating loan is much more popular than having multiple different loans. With this option, you don’t need to pay different loans each month. Just focus to a single loan consolidation, it’s practical and even sometime can offer you the better value of low interest rates.

In essence, a direct education loan consolidation allows you to put multiple different education loans into a single new loan. Moreover you are also offered with some special features from this program. Generally, the loan consolidation can be in private or in federal option. And each type has pros and cons, but your option is usually determined on your multiple loans were taken from.

The U.S Federal Student Aid offers a new direct student loan consolidation program called ‘Pay as You Earn Repayment Plan’. The major goal of this program is to plan students to keep have affordable range of monthly loan payments. Are you eligible for this kind of program? You may be qualified for it if:

1.      Your current education loan debt is relatively higher than your income. The federal lender may also need to analyze the time of when you have taken out the education loans (particularly for the federal loans).

2.      For most loans of direct consolidation, except if you have one that repaid PLUS loans for your parents.

If you seriously want to apply this new program, the following are some procedures you need to follow:

1.      You need to choose the ‘IBR /Income-Based Repayment’ Plan in consolidation of your application!

2.      Once your application has been made, the federal servicers will give you welcome materials for further information about the direct loan of your consolidation.

3.      The welcome materials that you receive will inform you about the next steps you need to follow. For instance, you will find a phone number of a federal loan servicer that you need to contact for the further evaluation of whether you are eligible to take the program. For in-depth information, visit the official site of the Federal Student Aid!

In addition, before taking a direct consolidation loan – you may also need to determine the type of plan for repaying. This may include income contingent repayment plan or repayment plans of graduated, extended, and standard.

The length of extended and graduated repayment plan can be up to 30 years. Then for standard repayment plan, (depending on the amount that you have) it offers a fixed contract of monthly payment for about up to 10 years. And for the plan of income-contingent repayment, it has period for about up to 25 years – and as the name suggests, it is commonly offered for graduated and have a job.