By Charles Gloson(p)
Most people want a good education. Today this is a costly prospect as the prices that colleges charge seem to increase every year. It is one thing to be able to acquire a loan for education but the headaches can begin after graduation when it comes to paying back the loan or loans. If you believe that you are going to have problems making the repayments then it is worth considering a direct student loan consolidation.
This service can offer you a solution whereby you will be provided with a new loan that has a lower interest rate. It will take away a lot of the concerns that you may have regarding your debts as it will turn all your loans into one manageable amount. It also will improve your credit rating allowing you to have piece of mind that you do not have a bad financial reputation.
The direct student loan consolidation program is run by the US Department of Education. As it is a government orchestrated scheme there are a number of inherent benefits that are provided to the graduate.
In essence the federal government recalculates all the individual student loans that you have taken into one loan that is easy to understand and repay. It has a fixed interest rate for the full term which is worked out by the average of all the individual loans that you had. There is a limit on this rate which is currently set at 8. 25%. It is much easier to keep track of your dues and payments using this method.
Another positive aspect is that the period for paying the loan back is often longer in duration than your previous loans. It can be anywhere up to thirty years. To be eligible for this service you must have at least one direct student loan that currently needs to be repaid. You can even amalgamate loans that have been defaulted on. Also there is no minimum fixed amount that you need to owe so as to qualify.
Presently there are four repayment plan options. It is up to you to choose which best suit your situation and requirements:
- Standard Repayment Plan: If you choose this option your monthly repayments will be a minimum of $50 per calendar month for between ten to thirty years.
- Graduated Repayment Plan: This differs from the standard plan in so much that your minimum payments have to be equal to the monthly interest. Often the initial payments are low and then will increase every two years.
- Extended Repayment Plan: To be eligible for this option your debt must stand at an amount greater than $30, 000 and you are given up to 25 years to pay it all back.
- Income Contingent Repayment Plan: Here, the monthly repayments are calculated on the graduates income, loan balance, and family size.
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