Student loans are two-edged swords. With out these, you couldn’t have the funds for that degree you worked so hard for. On the flip side, without them, you could actually get to maintain the sum you pay out on a monthly basis for yourself. You might get to pay your other costs when they're due, purchase a far more efficient car, or find a better location to live.
In the event that repaying your student loans is challenging your budget, or worse, putting your financial situation - and credit rating - at a negative balance, you might want to think about a direct student loan consolidation.
Having a direct student loan consolidation, you swap your outstanding student loans with their bigger interest rates for one loan with a much more manageable, fixed interest rate.
A direct student loan consolidation could be the answer to more than one problem. In case you have struggled to meet your monthly payments and in fact have used every option for deferment or forbearance your present loans offer, or maybe find yourself going to default on your loan, a direct student loan consolidation can certainly mean a fresh start. A new loan is often a clean slate.
Not only do deferment and forbearance choices become available in case of need once more, but often direct student loan consolidation gives you a more affordable interest rate - up to 0. 6 percentage points - and thus reducing your monthly payments. So when you consolidate those student loans under a new loan, those loans appear on your credit report as paid off, and your credit score gains.
There are actually 4 strategies for repaying a direct student loan consolidation which you many want to investigate when you think of which can be best for your needs.
The first plan is a Standard Repayment Plan and provides a fixed monthly payment for up to 10 years. The Extended Repayment Plan also sets fixed monthly payments, but the repayment time period is set between 12 and 30 years, based on the sum amount you borrow. In this plan your payments are lower simply because they are distributed across a long period of time. Keep in mind, however, that making payments over longer periods of time usually means you will end up having to pay a bigger total amount.
The 3rd alternative is the Graduated Repayment Plan. It is another direct student loan consolidation plan with a repayment period between 12 and 30 years, just in this plan the amount of your monthly payment will increase just about every two years.
Finally, when you have a job and family, the Income Contingent Repayment Plan may be just what you’re looking for. This plan sets a monthly payment based on your yearly gross income, family size, and total direct student loan debt, and distributes those payments over a period of 25 years.
While direct student loan consolidation may be the best way to acquire along with student loans for some, if you are near to paying off your current existing loans, it may not be worth it in the long run to consolidate or extend your payments.
However, if you're still seeing loan payments coming out of your pocket well into the foreseeable future, consider the direct student loan consolidation seriously. If you consolidate your loans while you are still in school, you might be eligible for a a 6-month grace period before repayment starts. Chances are you'll discover you'll be able to hold any subsidies on your old loans.
Lower your monthly payments, improve your credit rating, obtain control of your loans, and provide yourself peace of mind about the future with a direct student loan consolidation.
