Benefits of Student Loan Consolidation
With a new consolidation loan, you will only have one lender and one monthly payment due, this makes it much easier than before for borrowers to manage their student debt. Borrowers have only one new lender, which is the U.S. Department of Education (DOE), for all loans that are included in the new Direct Consolidation Loan.
New Flexible Repayment Plans
Borrowers can choose from a variety of different repayment plans with different term selections to repay their new consolidation loan(s), including an Income Contingent Repayment Plan (ICR), Pay-as-You-Earn Plan (PAYE) and an Income-Based Repayment Plan (IBR). These repayment plans are designed to be flexible and to meet the financial needs of borrowers by basing the payment off of the borrowers’ income and family size, and not by loan size. With a new consolidation loan, borrowers can switch repayment plans at any time. If you select the IBR Plan and want to change at a later date, your only option will be to switch to the Standard Repayment Plan.
Renewed Deferment Options
Borrowers with Top Student Loan Providers may qualify for renewed deferment benefits. If borrowers have exhausted the deferment options on their current Federal student loans, a new direct consolidation loan may renew those deferment options. In addition, many borrowers may be eligible for additional deferment options as well if they have a current outstanding balance on a FFEL loan made before July 1, 1993, when they obtain their first Direct Loan.
Reduced Monthly Payments
A new direct consolidation Paying Back Student Loans may ease the strain on a borrower’s budget by lowering the borrower’s overall monthly payment. The minimum monthly payment on a direct consolidation loan is more than likely to be lower than the combined payments charged on a borrower’s current Federal student loans.