DIRECT LOAN CONSOLIDATION | DIRECT STUDENT LOAN CONSOLIDATION
Direct consolidation loan gives the opportunity to the borrowers to consolidate all of their educations loans into a fresh loan know as federal direct consolidation loan. Getting converted all the education loans into one gives many advantages to the borrower such as low interest rates, payment to one lender, reduced monthly installments etc.
Federal direct consolidation loan is one in which an individual takes a loan not from any commercial lending institution but directly from the Federal Government, while federal loan consolidation is the act of consolidating outstanding loans.
A federal direct student loan is a loan offered by the government to students that need financial help for collage expenses. This program was started by the Department of education and with its help any student can now study properly without having to worry about his financial situation. Without this program, many students who had the intellectual ability of getting through collage but not the financial resources wouldn’t have any chance at higher education. But because the federal direct student loan aim for students with financial difficulties, anyone can now go to a great collage based on intelligence only and not on money.
The way a federal direct consolidation loan works is simple. The student is issued a new loan equal to his total loan amount after the government pays off all his outstanding loans. The new loan issued gives the student the benefit of enjoying a lower monthly payment by extending the student’s repayment term (which can stretch up to 30 years). The credit rating of the student also improves since his outstanding loans are effectively cleared when the old loans are repaid.
Their would be multiple factors affecting your decision for direct consolidation loan. But you must look into the following factors carefully while doing so. It will be good idea for you to go for federal direct consolidation loan if you have more than one one or two education loans with more than two monthly payments to be made.
As you get cheap interest rates on federal direct consolidation loan, therefore, its becomes more attractive to go for. One of the most important factors that you must check that how much principal and interest you have paid for the existing loans. If you have not paid more interest and the loans are not very old you must go for consolidation loans.