Direct Consolidation Loan VS FFEL Program loan

A Direct Consolidation Loan allows you to combine multiple federal education loans into one loan. The result instead of being multiple payments is a single monthly payment. Loan consolidation can also give you access to additional loan repayment plans and forgiveness programs.

What Is The Fee For Direct Consolidation Loan Application Form?

There is no application fee to consolidate your federal education loans into a Direct Consolidation Loan. You may be contacted by private companies that offer to help you apply for a Direct Consolidation Loan, for a fee.

These companies have no affiliation with the U.S. Department of Education (ED) or ED’s consolidation loan servicers. There’s no need to pay anyone for assistance in getting a Direct Consolidation Loan. The application process is easy and free.

Why Should I Consolidate My Credit Card Debts And Loans?

Advantages Of Loan Consolidation

• If you currently have federal student loans that are with different loan servicers, consolidation can greatly simplify loan repayment by giving you a single loan with just one monthly bill.

• Consolidation can lower your monthly payment by giving you a longer period of time (up to 30 years) to repay your loans.

• If you consolidate loans other than Direct Loans, it may give you access to additional income-driven repayment plan options and Public Service Loan Forgiveness. (Direct Loans are from the William D. Ford Federal Direct Loan Program.)

• You’ll be able to switch any variable-rate loans you have to a fixed interest rate.

How To Lower Monthly Repayment On Multiple Loans

If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, you might want to consider deferment or forbearance as options for short-term payment relief, or consider switching to an income-driven repayment plan.

Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. The loans that were consolidated are paid off and no longer exist.

Types of loans that can be consolidated

Most federal student loans, including the following, are eligible for consolidation:

• Subsidized Federal Stafford Loans
• Unsubsidized Federal Stafford Loans
• PLUS loans from the Federal Family Education Loan (FFEL) Program
• Supplemental Loans for Students
• Federal Perkins Loans
• Nursing Student Loans
• Nurse Faculty Loans
• Health Education Assistance Loans
• Health Professions Student Loans
• Loans for Disadvantaged Students
• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• FFEL Consolidation Loans and Direct Consolidation Loans (only under certain conditions)

Private education loans are not eligible for consolidation, but for some Direct Consolidation Loan repayment plans, the total amount of your education loan debt—including any private education loans—determines how long you have to repay your Direct Consolidation Loan.

Direct PLUS Loans received by parents to help pay for a dependent student’s education cannot be consolidated together with federal student loans that the student received.

Who Is Eligible For Loan Consolidation In USA or Canada?

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.

What Are The Requirements to consolidate a loan?

• You must consolidate at least one Direct Loan or FFEL Program loan.
• The loans you consolidate must be in repayment or in the grace period.
• Generally, you cannot consolidate an existing consolidation loan unless you include an additional eligible loan in the consolidation.
• Under certain circumstances, you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans. These circumstances are explained in the Federal Direct Consolidation Loan Application and Promissory Note.
• If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements (defined as three consecutive monthly payments) on the loan before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the
  • Income-Based Repayment Plan,
  • Pay As You Earn Repayment Plan,
  • Revised Pay As You Earn Repayment Plan, or
  • Income-Contingent Repayment Plan.

 

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