Simplification is the obvious advantage for consolidation loans for those people who have several different student loans. Convenience is the key pointer to people with many different student loans. By uniting them under a single Direct Consolidation Loan, repaying the loan becomes more easily manageable, because you only have to make one payment instead of several different ones. There are four different payment plans for you to consider which will benefit you most. But two types will take into account of your income.
You dont require to have graduated to take advantage of Direct Consolidation Loan. In most cases, you can expect to grant up to 0.6% lower interest rate than people who choose to refinance their loans after they have graduated.
Standard Repayment Plan
The Standard Repayment Plan has a maximum lifetime of ten years and borrowers are required to pay a fixed rate of at least $50 per month. Who prefer to choose this plan? For those people who want to pay lesser interest because of the shorter term. In general, the shorter the repayment period, the lower the total interest paid. For instance, 8.25% of interest for $15,000 of loan over 10 years will total $22,077 if you pay $184 per month. Total interest is only $7,077. This is considered the lowest interest of all the plans due to the short term.
Extended Repayment Plan
The Extended Repayment Plan can have loan repayment between 12 to 30 years with the same minimum monthly payment of $50. However, the period varies accordingly depending on the total amount of the debts the borrowers have. This plan benefits people with huge amount of debts and would like a lower monthly payment up to 30 years. Lets take the same example of $15,000 loan with 8.25% interest rate over 15 years of $146 monthly payment. That will be equal to $26,196. Sure, under the Extended Repayment Plan the interest borrowers have to pay will be higher than the Standard Plan.
Graduate Repayment Plan
The Graduate Repayment Plan, with a similar lifetime as that of the Extended Repayment Plan, the payments are low during the first period and they increase over time, usually every two years. Who will benefit in this plan? For borrowers who just start their career and expected their income to grow steadily over time. Of course, this plan also incurs more interest than the Extended Repayment Plan.
Income Contingent Repayment Plan
This plan takes into account the borrowers family size and annual Adjusted Gross Incomes (AGI) to decide the monthly payments with maximum of twenty five years. The flexibility of this plan enables borrowers to avoid any financial hardship by adjusting the payments accordingly to their income annually.
This article will provide a simple understanding of direct debt consolidation loan although there are more to know when it comes to complicated interest rates calculation.
writersblock
May 27, 2009 at 10:31 am
The answer will depend on something that I can't predict, and that is whether or not the loan has already been disbursed. I'm going to guess that the Department of Education isn't quite efficient enough to have already disbursed a loan that you signed for on Friday, but in this age of electronic money transfers, who knows?
I would definitely recommend that you call the DOE very first thing on Monday morning, but all you can do right now is keep your fingers crossed.
Good luck to you – I hope it works out!
CHiCKEN
May 27, 2009 at 10:54 am
I did. You can usually get a much better (and fixed rather than variable) interest rate that way. I am not sure what the cons are, I only know the pros.
ericacastanon81
May 27, 2009 at 12:58 pm
Usually there are not incentives beyond the amount of money you'll end up saving. Before you graduate you should have to undergo an "exit interview" for your loans, and they give you a lot of information there. If you don't want to wait that long, sometimes the financial institutions that you are borrowing from will have information, so try asking them directly.
The government also offers advice and services here:
http://www.loanconsolidation.ed.gov/
jj-85
May 27, 2009 at 9:26 pm
Most likely. But it would have been better to consolidate all the loans at once so as not to incur the origination fee. It's much better to consolidate your loans for a number of reasons. If you get into trouble (or just behind) with your loans, it's better to have one loan instead of a dozen.
jocelynt27
May 28, 2009 at 11:22 am
It is usually a few days to about a few week process, depending on if everything was done online or if you had to mail some paperwork. I would be concerned.
Is there a reason you chose to consolidate with a lender instead of Direct Loans? If you have already signed for the paperwork with the lender, then you will need to consistanly call and keep on top of them until the process is complete.
I would also check out how reputable the lender is. It seems that everyone is in the student loan consolidation business these days. Lenders like Sallie Mae, Chase, PNC, CitiBank, Teri Loans, Wachovia, SunTrust these are are all reputable lenders.
Good luck!
DIANA X
May 28, 2009 at 7:27 pm
Nowadays, many people can get into a bad credit situation if they do not keep track of their income and expenditure. Many young executives suddenly find that they are being offered credit cards by various companies. Those who are sensible will find a credit card that suits their needs, sign up, keep track of their purchases pay off their credit card bills in full each month, and ignore offers from other companies. There are others who may be dazzled by all the credit on offer and will end up with credit cards from several companies. They may easily end up making lots of purchases on credit while making the minimum payments on their cards.
http://best-loans.awardspace.com/Loan-Consolidation.htm
Then, one day they realize just how much debt they are in when they need a debt consolidation loan to get out of a bad credit situation. At the Debt Consolidation and Debt Reduction Service, we do not give you debt consolidation loans. We help you reduce your debts by 40 percent to 60 percent and your payments by 40 percent. We see to it that you pay no interest late fees, or penalties. We get you out of debt, and out of a bad credit situation, within three years. We ensure that you receive no more harassing phone calls from creditors by negotiating with them.
Michael
May 30, 2009 at 4:56 am
Red
May 30, 2009 at 9:42 am
They sent me (and still do actually) plenty of offers. Like you, it was not a company that I had any experience with. No one used it, so I elected to go with Sallie Mae, as my loans had already been sold to them, and their consolidation rates were the same (this was back in 2003). If I were you, I'd stick with Sallie Mae. Though I haven't heard anything bad about Educational Direct, I haven't heard anything good either…and unknowns with something this important are a bit scary to me.
crushqueen0204
May 30, 2009 at 5:22 pm
Student loans are eligible for consolidation, and usually have more favorable interest than you will get any place else. Why not try a car loan to just finance the car and consolidate the student loans – those will have longer payment terms, even 30 years, so the payment are the lowest you can get. Capital one is a good place for people with lower credit scores to get a car loan. Go to the capital one web site and check out what they offer for your car.