Direct Consolidation (Consolidating Direct)
Consolidating direct loans is a relatively straightforward process with many benefits for the borrower. Most students find that they need to take out a number of different types of loans to fund their education.
Many of these loans are from the US Department of Education’s direct loan program. Once you have left school (by graduating, dropping out or reducing to less than half time) you will be required to being repayment on your federal student loans. Consolidating your federal loans can reduce your monthly burden of bill payment and leave you with a significant increase in the amount of money you have in pocket.
About Direct Consolidation
While federal loans themselves have low interest rates, when you have a number of federal loans they will each have varying interest rates and fees. Direct consolidation allows you to have a single, low interest rate and a single bill each month for all of your loans.
The interest rate on federal loans increases yearly so it is important to be aware of the deadline for taking advantage of a lower rate. Every July 1st the US Treasury announces any increases to the national interest rates that affect all types of loans. As long as you are able to file prior to this deadline you can get the lower rate from the previous year. In some cases this can wind up saving you thousands of dollars and a number of repayment installments.
Direct Consolidation Benefits
- There is no application fee
- You can consolidate while you are enrolled
- You can combine all of your outstanding federal loans together even if they have different lenders
- You get a fixed interest rate on you loan
- You can have an extended period of up to 30 years
- Federal Direct Plus loans can be consolidated
- Direct consolidation keeps the benefits of deferment and forbearance in times of financial hardship and continuation of your education (if you consolidate while enrolled)
- There is no minimum balance or number of loans for Direct consolidation
- You can do the application online very quickly, (in less than 10 minutes) or by paper
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