Federal Direct Consolidation Loan

A federal direct consolidation loan would provide a student as well as their parents with a more convenient way to pay off your existing student loans. This is especially true if your outstanding loans are a combination of loans that include the Perkins Loans, Direct Loans and FFELP Loans. The thing with having a direct consolidation loan is that all of your current outstanding loans would be repaid and in its place; a new loan would be created, one that would have a single repayment period as well as a single combined interest rate thus making it easier for you to handle. What if you only have a single student loan to pay? You can also consider getting it converted into a direct consolidation loan.


Because this would enable you to experience the refinancing benefits that it can offer which includes a better interest rate and the added bonus of having more deferment options as well as repayment options that are more flexible than others offered in the market. What loan types can you include if you do decide to go for a federal direct consolidation loan? You can include the following: PLUS loans, federal student loans, FFELP Stafford loans both unsubsidized and subsidized, Health Professional Student loans, Federal SLS, HEAL, ALAS and Federal Perkins loans.

You can file your application for a federal direct consolidation loan whilst you are within the allotted payment time or right after you enter repayment. Basically, the time by you choose to consolidate all your outstanding loans would totally depend upon your current individual situation as well as your borrowing history. But before you do that, let’s talk about the benefits of consolidating your existing student loans. If you have two or more loans in existence, consolidating them would make the whole process of repayment easier for you. Instead of having to make numerous payments each and every month because you need to pay separate loans, through consolidation, you would only have to worry yourself with just one.

Another great thing about this kind of loan is the fact that your new interest rate just might be lower compared to what you are currently paying for all of your outstanding loans. With that said, a fixed rate is imposed on all direct unsubsidized and subsidized consolidation loans which is taken from the total interest rate of the combined average of all the loans that you included in the consolidation. This interest rate should not go beyond 8.25% and direct PLUS consolidation loan interest rate should never exceed 9%.

If you’re interested in applying there are three kinds of direct consolidation loans available to you. The first of which would be the direct subsidized consolidation which combines all of the federal student loans that are qualified to have subsidies from accumulated interest. This would include your FFELP, federal Perkins loans and direct loans. The next kind would be the direct unsubsidized consolidation loan which basically combines the federal student loans that are not eligible for the interest subsidies option.

If you have a loan that is unsubsidized and you wish to include it in the consolidation then you would then get an unsubsidized type of direct consolidation loan for it. Lastly, we have the direct PLUS consolidation loan which combines your direct PLUS loans and FFELP PLUS loans.

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