Individuals and their families who have collected a number of federal student loans over the years, and who wish to apply for another student loan from the government, can borrow under two loan programs, namely, the William D. Ford Federal Direct Student Loan program (FDSLP) and the Federal Family Education Loan Program (FFELP). The FFELP gives out over 80 % of financial assistance amounts to students and is backed by government funds. The FDSLP is funded by the Department of Education.
The FDSLP and the FFELP both include a loan scheme called, federal student loan consolidation. This kind of loan brings all your other loans together, and makes these debts fall under one kind. This consolidation accepts your PLUS loans, your Perkins loans, your Federal Nursing loans, your Health Education Assistance loans, and your Stafford loans but with certain qualifying or disqualifying conditions. Development of this program (federal consolidated loan program) originated from an aim to decrease the number of loan payment defaulters and a goal to assist students that they may completely repay their debts.
The option to pay under a single type of debt is open to students who are at post-secondary levels. There is a fixed interest rate to this consolidation of loans and this fixed interest rate remains true, for the entire term of a debt’s maturity. The student loans which have been consolidated, having their corresponding rates of interest on them, are joined with their interest rates, relatively distributed.
Every rate of interest attached to a particular loan is computed by the fixed interest rate of the consolidated loan, and are pegged at even amounts. This fixed rate of the consolidated loan becomes the weighted average that’s used to even out the amounts of these other debts. Parents of graduate students or professional graduates can apply for federal student loan consolidation.
One of the advantages of applying for a student loan under the FDSLP and the FFELP is how you extend the terms of your other debts. Not only are you able to secure a very reasonable extension for the other student loans which you’ve accumulated, you’re able to lower the amounts of debt repayments that you’re to pay monthly for your PLUS loans, your Perkins loans, your Federal Nursing loans, your Health Education Assistance loans, and your Stafford loans. You don’t necessarily have to possess debts to all five of these types of loans.
You could have a combination of these loans. Your PLUS loans, if you have one, only becomes eligible for inclusion in a consolidated loan application once you’ve been compensated for the full amount that you borrowed when you applied for a PLUS loan. All other debts which are not classified as being in grace status, in default or defer status, or repayment status, cannot be submitted for loan consolidation.
For consolidated loans under the FFEL program, students are expected to begin their monthly repayments when they have completed half of their academic workload. Repayments of federal student loan consolidation can be continuously paid for a term of up to thirty years.