Based on the programs, many college students leave school with various student loans, usually eight to twelve. As a student, it can be overwhelming to manage multiple loans, but available strategies help students simplify their repayment and manage their loans.
For example, if you take federal student loans, and consolidate them into direct consolidated loans, then it becomes one process only that students will manage easily. It combines the different federal student loans into a single loan and allows the students for one monthly payment.
Before applying for a direct consolidation loan, you should read the complete article and know its eligibility criteria and requirements.
What is a Direct Consolidation Loan?
It can be easy to consolidate two or more federal loans into a single consolidated loan and it allows for one payment monthly in order to track. If you also want to access one monthly payment, you should consider the direct consolidation loan.
The direct consolidation loan interest rate is considered a weighted average rate on the type of loans you will consolidate, and it is around one-eighth of loan percent. If any of your loans have a high rate of interest, then you have to pay much more interest on it.
The best thing about direct consolidation loans is that you can increase the loan repayment term for 30 years. In this way, it helps you to reduce monthly payments. Keep in mind that you have to pay higher interest with time if you apply for a direct consolidation loan for the long term.
Who is Eligible for it?
If you want to apply for a direct consolidation loan, you must carry at least one federal family education loan, repayment, deferment, or default status. Loans that exist in high school status are not considered direct consolidation loans.
What are the Application Requirements?
The education departments of the US set certain requirements that you should meet to consolidate your multiple federal student loans into direct consolidation loans. For beginners, any loan they want to consolidate should come with active repayment status or grace period.
If your loan defaults, you must make the approved repayment arrangement before consolidating.
According to the optional choice, you can also create your new direct consolidation loan under the four income repayment-driven, like income-based repayment, income-contingent repayment, etc
Usually, you need help to consolidate the existing federal consolidation loan. One exception to this rule: you can combine another eligible student loan in your new direct consolidation.
The education department also permits you to again consolidate the federal consolidation loan that is due in the past or exists in default only if you are eligible for a new income-driven repayment plan.
Based on the above requirements, only the below-given federal plan is eligible for direct consolidated loan application.
- Direct plus loans
- Guaranteed student loans
- National student defense loans
- Health professional student loans
- Subsidized direct loans
- Perkins federal loans
- Loan for disadvantaged students
- National direct student loan
- Federal-insured loans
How to apply for direct consolidation loan application?
You can easily apply for a direct consolidation loan through https://studentaid.gov/, which has no fees. Here are some simple steps you should follow, in order to easily consolidate the more than two federal loans
1. Loans Review
Before starting the direct consolidation loan application process, you must first decide which loan you want to consolidate. You should review your federal loan and check whether they are eligible for the direct consolidation loan process.
2. Gather the documents
To fill out the application for a direct consolidation loan, you required the federal student Aid ID. If you do not have a student Aid Id, you must first set up this ID at the above-mentioned official site. You must give an email address, contact number, and social security number.
3. Complete the application
Once all the above information is gathered by you, you have to proceed towards the application for direct consolidation loan. The process of completing a direct consolidation loan application only takes 30 minutes.
4. Manage the payments
A period of 30-45 days is taken to complete loan consolidation. During this time, ensure to keep up with all loan payments. After approval, you will start to make payments on your new direct consolidation loan.
If you want to make payments on various federal loans, but are facing troubles in all, then you should consider the direct consolidation loan application. This application program will integrate all federal student loans into a consolidation loan with a fixed rate of interest.
What is the direct consolidation loan interest rate?
The interest rate is referred to as the weighted average of an interest rate for all types of loans that are consolidated, rounded to higher next one-eighth of one percent. The interest rate for direct consolidation loans is 0% under the part of the federal loan.
Is a direct consolidation loan a federal loan?
Yes, it is one form of federal loan that will mix up the different federal education loans into one loan. The new fixed consolidated rate is based on the average loan rate that is consolidated.
How long does a direct consolidation loan take?
Usually, applying for a direct consolidation loan takes a few weeks, but sometimes it also takes months. This loan consolidation application takes 30 to 45 days.
Where do I mail my federal direct consolidation loan application?
You should mail your completed direct consolidation loan application to your nearest consolidation servicer, responsible for completing the loan application process. Your nearby consolidation servicer will service your direct consolidation loan.
Are direct consolidation loans eligible for 10k forgiveness?
Direct consolidation loan program lets the applicants to consolidate the different types of federal loans and results in direct consolidation loan. Then, it will lower the amount for monthly payment and give access to the forgiveness program.