Direct Consolidated Loans And Their Effects By
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Direct Consolidated Loans And Their Effects By

Whoever said that education is the key to unlock the golden door to freedom had never heard of Student Loans! Most students, by the time they graduate, will have multiple loans to repay and each of these loans come with a different interest rate. Whether they are federal student loans, private student loans or a combination of both, the loan repayment is expected to start within 6 months of graduation and they are dark shadows that loom over the student’s future until the loan amounts are totally repaid. For most graduates, if they are prudent in their spending and careful about the loan repayment dates, the loan repayment period can be anywhere between 15 to 20 years; it may even extend to longer than that if the student has opted for either a deferred plan or a plan with smaller monthly repayments.

Interests form a big enough share of the total loan repayment amount to prompt students to look for alternative methods of loan repayment. Another consideration could be the difficulty in keeping up with the repayment dates of each loan. The direct consolidated loan option can help tackle both challenges. Not only does loan consolidation allow all the interest rates to be averaged out into one, but it also helps in just one repayment per month. The ease of repayment and converting very high interest rates into manageable ones are two significant reasons for any graduate to consider converting to direct consolidated loans.

Consolidation of loans is equivalent to refinancing a loan. The terms and conditions of loan repayment and the installment values will change. Keep in mind that only Federal loans can be consolidated. So, if you have taken private loans or loans that carry no federal guarantee to finance your tuition fees and living expenses while in college, be aware that these loans will not come under the purview of consolidated loans. The terms and conditions that you agreed on while applying for any private loan will remain unchanged. The loans that can be included in consolidation are any loans that you have taken under the following programmes : Subsidized or Unsubsidized Stafford Loans, Supplemental Loans for Students (SLS), Federally Insured Student Loans (FISL), PLUS loans, Direct Loans, Perkins Loans and Health Education Assistance Loans.Since the purpose of direct consolidated loan is to have a certain fixed interest rate, which will be calculated as an average of the various interest rates...


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