By increasing your loan repayment period, you’ll have more payments to make and will end up paying more in interest.
There are no prepayment penalties with a Direct consolidation loan, so feel free to pay more when you have the extra cash — it’ll help you save on interest. According to the Education Department, federal loans eligible for a Direct consolidation loan include: Subsidized and unsubsidized Direct loans, subsidized and unsubsidized Stafford loans, Direct PLUS loans, PLUS loans from the Federal Family Education Loan (FFEL) Program, Supplemental Loans for Students (SLS), Perkins loans, Health Education Assistance Loans (HEAL), federal nursing loans and some existing consolidation loans.
A Direct Consolidation Loan allows you to consolidate your student loans into a single loan, with a single monthly payment.
Borrower benefits that could be lost include: Other drawbacks include paying more interest.If you have multiple student loans from the federal government, then it’s likely you make multiple payments to various lenders.The result is more payments to keep track of and it’s easier to forget a payment.Ideally, you would qualify for debt consolidation after graduation.However, you also could qualify when you leave school or are enrolled less than half-time.The interest rate you pay will be the weighted average of the interest rates on all your loans being consolidated, rounded up to the nearest 1/8 of a percent.Therefore, if you have some loans with a significantly higher interest rate, it could be beneficial to consolidate.It is quite common for people with student loans to deal with 10-12 lending institutions, which means 10-12 payments and 10-12 due dates each month.When you consolidate student loans – either federal or private – it’s one payment to one lender, once-a-month. Loan consolidation for student loans was created to make it easier for millions of borrowers to pay off their debt.You can’t consolidate private loans in the federal Direct Consolidation Loan program, but some private lenders allow you to consolidate federal and private loans together.The Direct Consolidation Loan program is the right choice if your goal is to simplify the process and keep your options open for the many repayment plans available for federal loans. Your rate is determined by the weighted average of the interest on the loans being consolidated rounded up to the nearest one-eighth of 1%.