Direct Student Loan Consolidation (Repayment Options)
When you consolidate your Direct loans you need to know how to handle the payments and what the program itself entails. The Direct loan program has a number of different types of repayment arrangements to meet the variety of income situations of borrowers.
The federal loan programs supply the greatest number and variety of loans in the country so they do their best to make repaying the loans easy on the borrowers. In addition to undergraduate loan programs, there are graduate loans offered and consolidation is possible for either type of federal loan program. Most federal loans are eligible for direct student loan consolidation and come with the four major repayment types. You can choose a type of repayment that you think suits you and if you have difficulty with it you can change the plan with the annual adjustment.
Standard of Direct Student Loan
The standard repayment plan gives you a fixed amount to pay for each monthly installment. You simply make the same payment each month until your loan is paid off. You can make payments greater than the installment amount and pay off your loan early without having to pay any penalties. This simple plan is easy for anyone with a steady income with a low to moderate level of debt.
Graduated
With this repayment plan you start out with a particular installment amount. You will pay this amount for a number of years as it gradually increases. Typically, your graduated repayment amount will not exceed 1.5 times the amount you will pay with the standard rate. It simply anticipates increases in your income with the amount of time you spend on the job. As the years go by the increase in payment should match your increases in pay. This plan is great for people who expect their income to increase gradually and want to make a shorter payment plan.
Extended Role of Direct Student Loan Consolidation
For people who have larger loan debts, there is the option of the extended plan for direct student loan consolidation. Typically, this plan is for people who have completed medical and law school programs. You need a greater term to repay the debt, and in most cases you do not start out your career at the top of the market. This plan usually has up to 30 years for repayment.
Income Contingent
This plan is great for people who have difficulty entering the workforce or have careers that have lower than average pay scales. Your monthly payments are based on you current income and adjusted annually. The maximum payment term for income contingent plan is usually about 25 years.
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