Understanding That You Can Consolidate Your Loan
One way that students can get out of student debt is to consolidate their loans, which can be consolidated into what they call a Direct Consolidation Loan. Keep in mind that a person can do this even if they have only one federal loan riding on your record. Consolidation can be a very great selection for getting out of student loan debt if you’re able to commit to the repayment plans in which consolidation requires. What a lot of students fail to check into is if they can tap into a consolidation plan.
For example, if a person has a Federal Family Education Loan or even a Perkins Loan, this will mean that they’re not eligible for Public Service Loan Forgiveness, but keep in mind that if they consolidate that into a Direct Consolidation Loan, therefore a person would be eligible. Please take into consideration that if a person has a Parent PLUS Loan and decide to consolidate it with other Direct Loans, they will lose access to most income-driven repayment plans on the entire consolidation (in which a person can do).
Did you know that Parent PLUS Loans are only eligible for the income-contingent repayment plan? Not only that, but a person will need to have a Direct Consolidation Loan first. Parent PLUS Loans are executed from most assistances which are provided by our federal government but keep in mind that if they consolidate these types of loans, they will become eligible for income-contingent repayment, as well Public Service Loan Forgiveness.
Please remember that to consolidate a federal student loan; a person will be asked to make three unpaid repeated on-time payments on the defaulted loan. What if they don’t want to make those three voluntary payments? Not to fear, they will still be able to consolidate your loans if they simply agree to enter an income-driven repayment plan. As a side note, a person will only be able to consolidate your loans once and below in a listing format; we are going to provide out that specific process.
Number One: To start, a person must apply online through www.studentloans.gov or transfer an application form and mail a finished copy to the Department of Education.
Number Two: Once they have applied, the department will then mail you a thorough listing of all the loans that would be comprised in the consolidation and the repayment plan they have nominated. They will have fifteen days to evaluate and dispute any of the terms of your loan(s), counting what repayment plan you’re going to be placed in or interest rates. If they don’t contact the Department in that fifteen-day period, the agency will accept everything is correct and process the consolidation. While the department is putting all this data together, the agency will most likely demand that they make interest costs on the loans. If a person can’t afford the interest costs, they can apply for forbearance until they can inform the student to authorize their new consolidated loan sum amount.
Number Three: The collection costs related with their defaulted loan will likely be added to the principle of your new Direct Consolidation Loan, but legally the costs will not surpass more than 18.5% of the remaining principal and interest. For example, a defaulted loan of $8,500 plus $1,500 of accrued interest = $10,000. Fees of $1,850 can be added to the $10,000, and that would mean that the new consolidated loan amount would total $11,850.
Number Four: To qualify, a person will be asked to make three uninterrupted, as well rational and inexpensive monthly payments or agree to enter into income-contingent reimbursement or an Income-Based repayment strategy.
Now, after that initial process, all your loans will be rolled into one loan in regards of only having to pay one payment per month, and therefore a person can then begin to make their regular payments.