Student loan consolidation
Student loan consolidation
allows you to better manage your debt, because you’ll only have one lender and
one monthly bill to deal with. Borrowers will have only U.S. Department of
Education as lender for all loans included in a Direct Consolidation Loan.
Another advantage of debt consolidation
is that you’ll benefit from flexible repayment options. Students or their
parents can choose from multiple flexible plans, designed to meet the different
needs of the borrowers. Moreover, you can even switch repayment plans anytime
if you like.
Also, student loan
consolidation allows for varied deferment options. A deferment is a temporary
suspension of your loan payment. If you have exhausted all your deferment
options of your current federal education loans, you can renew some of them
under a Direct Consolidation Loan.
Moreover, student loans
consolidation could lead to reduced monthly payments, easing the strain on your
budget. It also makes possible the retention of subsidy benefits. There are two
possible portions to a Direct Consolidation Loan, subsidized and unsubsidized.
Borrowers retain their subsidy benefits on loans that are consolidated into the
subsidized portion of a Direct Consolidation Loan.
During a one-year period, students
who meet certain requirements may consolidate loans that are in an in-school status into a Direct
Consolidation Loan. Direct Consolidation Loans may be made under this temporary
provision to borrowers whose consolidation applications were received on or
after July 1, 2010 and before July 1, 2011. However, you will lose the grace
period on a FFEL Subsidized/Unsubsidized Stafford Loan or Direct
Subsidized/Unsubsidized Loan by consolidating the loan while it is in an
in-school status.
