Direct Loan Consolidation
Many students and parents that have multiple Direct Loans are faced with paying multiple loans every month, which can be very time consuming and expensive. Consolidating your Direct Loans can be advantageous, since it will lower your monthly Direct Loan Payment and usually offers a lower interest rate.
A Direct Loan Consolidation will lower you monthly payment because instead of having multiple payments with various minimum payments, you now have one low monthly payment. Also, by completing a direct loan consolidation you will have one interest rate instead of the various student loan interest rates. This will save you money over the long run, since you will only have one low consolidated interest rate.
Direct Loan borrowers interested in a Direct Loan Consolidation can also extend their repayment terms to up to 30 years. Students that qualify for an Income Based Repayment Plan have to opportunity to pay up to 25 years and the remaining 5 years of loan value will be forgiveness.
Borrowers must be aware that once they’ve completed a direct loan consolidation, they will not be able to consolidate the same Direct Loans in the future. All loans can only be consolidated once. Any new direct loan that was created after the consolidation is not affected by this policy.
The Direct Loan Consolidation Interest rate is based on a weighted average of the Direct Loans being consolidated. The interest rate is rounded to the next higher 1/8 of one percent. The interest rate of a direct loan consolidation will be no higher than 8.25 percent.
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