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A Direct Consolidation Loan allows you to consolidate all of your federal student loans into one loan resulting in one payment to one lender.
Some factors to consider before consolidating your loans:
Are your monthly payments too High?
If you are having trouble making your monthly payments, a consolidation could help you stay out of default and lower your payment by extending the loan term or by utilizing one of the available government programs.
Are you making multiple payments to multiple lenders?
By consolidating all of your existing loans into one loan you will only need to make one monthly payment to one lender. This can reduce the time and organization required to make multiple payments and reduce the chances of missing a payment by accident.
Do you have a mixture of high interest rate and low interest rate loans?
If you have variable interest rate loans, a Direct Loan Consolidation could be right for you. The interest rate is fixed for the life of the loan when you do a Direct Loan Consolidation and the rate is based on the weighted average interest rate of the loans being consolidated, rounded to the next higher one-eighth of one percent and cannot exceed 8.25 percent.
Please note, if you do not have many payments left on your loans it may NOT make sense to do a Direct Loan Consolidation. Furthermore, if you have already made payments towards an income-driven repayment plan forgiveness or Public Service Loan Forgiveness plan, consolidating your loans will cause you to lose credit for those payments.
These are all factors 8 Consumer Consulting will assist you with when considering what is the BEST option for YOU!