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1. What are the benefits of a Direct
Federal Consolidation Loan?
Direct Consolidation Loans allow borrowers to combine one or more
of their Federal education loans into a new loan that offers several advantages.
One Lender and One Monthly Payment
With only one lender and one monthly bill, it is easier than ever for borrowers
to manage their debt. Borrowers have only one lender, the U.S. Department of
Education, for all loans included in a Direct Consolidation Loan.
Flexible Repayment Options
Borrowers can choose from four different plans to repay their Direct
Consolidation Loan, including an Income Contingent Repayment Plan. These plans
are designed to be flexible to meet the different and changing needs of
borrowers. With a Direct Consolidation Loan, borrowers can switch repayment
plans at anytime.
No Minimum or Maximum Loan Amounts or Fees
There is no minimum amount required to qualify for a Direct Consolidation Loan!
In addition, consolidation is free.
Varied Deferment Options
Borrowers with Direct Consolidation Loans may qualify for renewed deferment
benefits. If borrowers have exhausted the deferment options on their current
Federal education loans, a Direct Consolidation Loan may renew many of those
deferment options. In addition, borrowers may be eligible for additional
deferment options if they have an outstanding balance on a FFEL Program loan
made before July 1, 1993, when they obtain their first Direct Loan.
Reduced Monthly Payments
A Direct Consolidation Loan 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 may be lower than the combined payments charged
on a borrower's Federal education loans.
Retention of Subsidy Benefits
There are two (2) possible portions to a Direct Consolidation Loan: Subsidized
and Unsubsidized. Borrowers retain their subsidy benefits on loans that are
consolidated into the subsidized portion of a Direct Consolidation Loan.
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