Should i do special direct consolidation loan

Terms available under special consolidation generally are more favorable. The problem stemmed from borrowers clicking on the wrong links on the Department of Education website. Baxton was able to redirect the students who came to her for help. She said that if some of the students she counsels were going astray, she figured others likely were confused as well.

Pamela Alonzo is a borrower who accidentally locked into a traditional consolidation loan not because she followed the wrong links but because she pursued consolidation too early and none of the Department of Education representatives she spoke with along the way advised her that special consolidation was coming.

Consolidating that many loans naturally was attractive and something Alonzo began considering in September as her six-month grace period for repayment neared an end. A year-old with experience in home ownership and a general interest in personal finance, Alonzo said she gave careful thought to the consolidation option, not wishing to exercise it prematurely.

If you consolidate sooner, you have to pay sooner. However, the VIN News Service estimates that with the discounts available under special consolidation, her interest rate would have been about 6. I was asking them, literally, what my options were with consolidation and if I should wait, and how is my interest rate calculated, etc.

We tried to let borrowers know last fall this would be available in At one extreme is Sallie Mae , which has nothing on its main website about government student loans.

Asked where on the Sallie Mae website a borrower could find information, company spokeswoman Patricia Nash Christel provided an address to an auxiliary site that she said is shared with eligible borrowers.

We will continue to counsel our federal loan customers on the options available to them under the federal programs and on the best possible management of their student loans, including the Special Direct Consolidation Loan, Income-Based Repayment and other options.

Nelnet, too, gives step-by-step instructions. The VIN News Service was unable to reach a Nelnet spokesman last week to discuss the complaints that surfaced about Nelnet when the program debuted in January. Mary Roggeman, vice president of marketing at Great Lakes, said the organization continually receives updated lists of eligible borrowers, whom it attempts to contact via email and regular mail.

Letoutchaia spoke with Roggeman today and is waiting to hear back. FedLoan estimates that among the four million borrowers it services, one million are eligible for special consolidation. Initially, New said, FedLoan received applications a day.

The rate has since risen to 1, a day. Borrowers interested in Special Direct Consolidation Loans who have not heard from their servicer may sign into their U. Do you want a fixed interest rate loan instead of a variable rate loan? Do you want access to different repayment options? Do you want to qualify for Public Service Loan Forgiveness?

Do you want to get out of default? Don't see what you're looking for? Should I consolidate my private student loans? Should I consolidate or refinance my student loans? Learn more about student loans. Search for your question Search for your question. Once this process is complete, the borrower will then have a single monthly payment on the new loan, instead of multiple monthly payments on several loans. The advantages of a direct consolidation loan are fairly straightforward.

You may be eligible for lower monthly payments because the repayment term is extended up to 30 years. You can also get a lower interest rate because direct consolidation loans have a fixed interest rate. Since July 1, , all federal student loans have had a fixed interest rate. However, if any of your loans were disbursed before this date, it's possible you could have a variable interest rate. In addition, you only have to make one payment per month. This can make it easier to keep track of your student loan balance.

Borrowers may also get access to different repayment options. These types of repayment plans are available for direct consolidation loans:.

You must make three consecutive monthly payments on the defaulted loan first or agree to repay your new direct consolidation loan through one of several different options of repayment plans. You don't have to wrap everything into the consolidation loan. Applicants using the studentloans. The form on the website will automatically import all the federal loans under the applicant's name.

However, borrowers should keep in mind that their interest rate may also increase; because consolidation extends the repayment period—perhaps to 30 years—your monthly payment is lowered but this also results in you paying more interest over the life of your loan.

You don't get a grace period with a direct consolidation loan; the repayment period starts immediately upon consolidation, and the first payment will be due in around 60 days.

In addition, if your loans were in default, you won't get an automatic credit boost if you consolidate your loans. Prior loan payments before you consolidated will not count towards loan forgiveness requirements.

And finally, there are some benefits you may lose by consolidating your loans. There are several different reasons why you might choose direct loan consolidation. If tracking all of your student loan payments is difficult, consolidating all of your federal loans into a single monthly payment may be beneficial for you. Not all federal loans are eligible for income-driven repayment plans. By opting for direct loan consolidation, you will be able to access income-driven repayment plans.

You may also opt for direct loan consolidation if you want to be eligible for certain loan forgiveness programs. With an income-driven repayment plan, you can qualify for forgiveness of the remaining balance at the end of the repayment term. Additionally, direct loan consolidation may be the right choice if you want a fixed interest rate.

If you have federal loans that were disbursed before July 1, , one or more of your loans may have a variable interest rate. Direct consolidation loans have fixed rates only.

This obligation continued even after divorce. Not surprisingly, this caused a lot of problems for borrowers and Congress eliminated the program as of July 1, There are still many borrowers struggling with joint consolidation loans. There are numerous problems that can arise—for example, if one of the divorced ex-spouses wants to apply for income driven repayment.

Problems often arise if the ex-spouses are no longer in contact. Another common problem is that partial discharge of a joint consolidation loan under any of the discharge programs other than death discharge does not eliminate joint liability for the remaining balance. Further, borrowers with joint FFEL consolidation loans, according to the Department, may not reconsolidate into Direct Loans and therefore are not eligible for public service loan forgiveness.

There was also a Perkins loan program for many years. These were low-interest loans for both undergraduate and graduate students with exceptional financial need. Perkins Loans were originated and serviced by participating schools and repaid to the school.

For now, there are no new Perkins loans being made. The Department has also posted information about the winding down of the Perkins program.

This site has information about unique Perkins repayment and cancellation options. Although this site does not cover federal grants, it is important to know about the main grant programs and find out if you are eligible. Pell grants are the biggest grant program. These grants are for undergraduates only and tied to financial need. There a lifetime eligibility limit on Pell grants.

This can be restored in limited circumstances, including if you get a closed school discharge. The amount of Pell grant funds you may receive over your lifetime is limited by federal law to be the equivalent of six years of Pell Grant funding. Get more information about Pell grant eligibility limits. In most cases, you do not have to pay back a Pell grant, but there are some limited exceptions including if:.

If you owe a grant overpayment and fail to pay or set up a payment plan, you will lose eligibility for future aid and possibly face collection. If you have a TEACH grant and you do not meet the conditions required for TEACH grants mainly serving as a full-time teacher for the required time period in a certain type of school , your grant will be converted to a Direct unsubsidized loan.

Due to problems and errors in this conversion to loan process, the Department has created a process for TEACH grant recipients in this situation to request reconsideration of the conversion from grant to loan. Please visit our blog for the most up to date information on what this will mean for student loan borrowers. Federal Loan Basics Can I get relief? Federal student loan amounts and terms for loans issued in Stafford Loans Stafford loans are for undergraduate, graduate and professional students enrolled at least half-time.