Debt Consolidation Loan and Repayment Plans for Students

The rising costs of college education has taken a toll on the lives of the students as they’re not being able to make ends meet with the meager amount that they get from their part-time jobs or from their allowances. In order to complete their college education, they’re taking out federal student loans with which they can get access to immediate cash and use the proceeds to pay off their college fees. Are you someone who has taken out too many federal loans at the same time? If answered yes, you must be looking for ways in which combine all your debts together through a single loan. Well, there are direct debt consolidation loans that are lent by the US Department of Education that can help you repay your debt with ease. Here are some benefits that you may reap from the debt consolidation loans.
  • Single lender and single monthly payment: As you must have taken out multiple loans from multiple lenders, you must be facing trouble while splitting your payments among multiple lenders. When you take out the debt consolidation loan, you just have to make a single monthly payment to the lender and you can become debt free within a short span of time.
  • Revised interest rates: The federal debt consolidation loan will also carry lower interest rates than what you were paying on the individual educational loans. The interest rates are the biggest reason behind the large number of student loan defaults and hence with the debt consolidation loan being a single loan with lower rate, you can save a considerable amount of money.
  • No fixed amount to qualify: You don’t need a fixed amount to qualify for the direct debt consolidation loan lent by the US Department of Education. Generally, in order to qualify for debt consolidation loans, you need to owe a certain amount of money but when it is a direct debt consolidation loan, you can take out this loan with any amount of money.
  • Flexible repayment terms: The most common repayment term of the direct debt consolidation loan is the Income Based Repayment Plan and there’s another that needs mention, the Income Contingent Repayment Plan. You will also be allowed to change from one repayment plan to another according to your changing financial needs.
Therefore, when you think that your student loan debt will hurt your credit score and make you unworthy of getting new lines of credit in the future, you should take out a direct debt consolidation loan. Manage your finances and pay off your new loan at the right time to avoid any cancellation of the deal.