The Four Types Of Direct Student Loan Consolidation

The Four Types Of Direct Student Loan Consolidation



The Four Types Of Direct Student Loan Consolidation
As a​ student,​ do you​ find it​ hard to​ repay your student loans? While student loans are great in​ that you​ and I​ will probably not be able to​ afford a​ tertiary education without it .​
On the​ other hand,​ it​ can be difficult to​ pay the​ monthly payments on​ time due to​ the​ high interest rate and other external factors which can challenge your wallet.
If you​ have a​ difficult time in​ repaying your student loans,​ you​ might want to​ consider a​ direct student loan consolidation.
So what is​ a​ direct student loan consolidation?
In essence,​ it​ is​ simply exchanging or​ consolidating your existing outstanding student loans with higher interest rates for one loan with a​ more manageable,​ fixed interest rate .​
The interest rate is​ determined by the​ average of​ your loans,​ rounded to​ the​ nearest 0.125 per cent.
A direct student loan consolidation is​ especially useful if​ you​ know you​ are about to​ default on​ your monthly student loan payments .​
a​ direct student loan consolidation can mean a​ new start since it​ is​ considered a​ new loan.
When you​ consolidate your student loans under a​ new loan,​ your existing loans will show up on​ your credit card as​ paid off,​ thereby increasing your credit score.
Before getting a​ direct student loan consolidation,​ you​ need to​ know the​ types of​ plans for repaying .​
There are four major types .​
You may like to​ investigate more to​ consider which is​ best for your needs.
1 .​
Standard Repayment Plan
Standard Repayment Plan allows you​ a​ fixed monthly payment for up to​ 10 years depending on​ the​ amount you​ owe.
2 .​
Extended Repayment Plan
An extended repayment plan allows you​ up to​ 30 years .​
Obviously,​ the​ longer the​ period,​ the​ less amount you​ need to​ repay each month .​
Do note,​ however that you​ will end up paying more as​ a​ whole if​ you​ spread your payment over longer periods of​ time due to​ interest rates.
3 .​
Graduated Repayment Plan
Graduated Repayment Plan usually have a​ repayment period between 12 and 30 years .​
The main difference between graduated and extended repayment plan is​ for graduated,​ the​ amount of​ your monthly payment will increase every two years.
4 .​
Income Contingent Repayment Plan
If you​ have a​ job,​ then this plan may be what you​ are looking for .​
The income contingent repayment plan set a​ monthly payment based on​ your gross annual income .​
Other factors include your family size and the​ amount owe .​
The repayment period is​ usually 25 years.
A word of​ caution,​ if​ you​ are close to​ paying off your student loans,​ then a​ direct student loan consolidation may not be suitable for you​ since you​ will be paying more due to​ interest rates over the​ long term.
However,​ if​ you​ have difficulty in​ repaying your student loans and it​ is​ still years away from being paid off,​ then a​ direct student loan consolidation may be the​ answer .​
Not only do you​ pay less interest over the​ long term but it​ can improve your credit rating as​ well.




You Might Also Like:




No comments:

Powered by Blogger.