Consolidating to a direct loan

Manage Monthly Budget Savings from reduced monthly payments allows you to pay other monthly bills with higher interest rates, such as credit cards.

Remove Loans From Default Status After making satisfactory repayment arrangements with the holder of your loans in default, you can consolidate those loans and reinstate benefits (deferments, eligibility to apply for financial aid, etc.) that were lost when your loans were placed in default.

When it comes to student loans, however, the refinancing picture is more complex.

The reason is that today’s student loans are actually a combination of Federal and private loan programs, and to help alleviate explosive levels of student loan debt (the total of which now exceeds all outstanding revolving credit card debt in the U. ), Federal student loans are getting access to multiple forms of “flexible” repayment plans.

No Extra Costs There are no application or processing fees and there are no prepayment penalties.

Visit the Federal Student Loan Consolidation Webpage for more information. You should know the interest rate, fees and terms before you sign any agreement.

In general when discussing consumer debt management, terms like “consolidation” and “refinancing” are often used interchangeably, as the act of consolidating multiple loans into one typically involves the action of refinancing them (taking out a single new loan with new terms and using the proceeds to repay and replace the old loans with less favorable terms).

However, when it comes to student loans, there is actually a difference between refinancing (which may include consolidation of many loans into one) versus consolidating multiple loans into one, thanks to the Federal Direct Consolidation Loan program.

Accordingly, this massive growth in debt has led to similarly massive growth in refinancing and consolidation programs specifically for student loans, including “traditional” lenders like Citizens Bank to alternative lenders like Earnest, and new “non-bank” marketplace lending alternatives like Common Bond and So Fi.If you just want to reduce your monthly payment, discuss the federal loan repayment options available with your lender. Single Payment If you have loans with multiple lenders/holders, you send a monthly payment to each.However, if you consolidate all those loans, you make a single payment.Some of which even include terms that allow unrepaid student loans to be forgiven after 25, 20, or even 10 years in some circumstances.But flexible Federal student loan repayment programs are only available to student loans.