Federal Student Loans

Federal student loans are designed to help the students with finance needed for their education. Once you have borrowed federal student loan you also need to manage it well. Your responsibilities of management include paying back the loan. If you have taken several loans and they are of varying interest it will be difficult to manage all those loans together. In such a case best option is to consolidate the student loans and solve this issue. Best repayment method for federal student loan is income based repayment plan or IBR.  For consolidating your loans you can seek the help of debt consolidation and settlement companies that are available online.

You can also consolidate federal student loan with Department of Education. To make this more manageable and to consolidate you need to have certain things like:

  • Computer with access to internet and printer
  • Copy of the history of federal student loan
  • Aid PIN of federal student loan
  • Consolidation forms of direct loan
  • Tax return statement which is most recent

Applying for Loan Consolidation

For applying for direct loan consolidation first thing you need to do is to log in to the website of National Student Loan Data System. You have to save the file or take print of each loan.

Take print out of Repayment Plan Selection form along with other forms you feel necessary. You might have to take print out of Income forms Alternative documentation along with Consent to Disclosure of Tax Information on the basis of your repayment plan and financial situation.

Next step is to complete the Direct Loan Consolidation application which can be done online. At the end you need to sign the application along with promissory note and with your PIN. You can also take a print out of the application and mail it to Direct Loan Consolidation Centre. On the basis of the plan selected by you it might be necessary to mail a copy of tax return along with forms.

The form for consolidation need to be accurate and so check for any correction and in case you found any report it to the office of Direct Loan Consolidation. In a span of ten days you will get the summary sheet that your balance loan amount has been certified by the Direct Loan Consolidation Center.

After getting the paper call to the office of Direct Loan Consolidation Center to confirm whether they have got all necessary papers in this regard. In case any more papers are needed, make sure to mail the forms so that there won’t be any changes to the plan selected by you.

Benefits of Consolidation

  • Student loan consolidation will help you to reduce your interest rate. This is because debt consolidation loans are available for a much lower rate than student loans. This will also make repayment of loan amount easier.
  • Consolidation will further reduce monthly payment. This is because on consolidation the interest rate is reduced by a considerable rate and thus the monthly payment too will become less.
  • Yet another benefit of loan consolidation is that you might be able to get a waiver for your late fees. This is because there is a chance that your counselor makes a negotiation with lender to waive off the fees towards late payment or other penalty charges.
  • Debt management becomes easier for all the loans have been grouped into one with a single rate of interest and thus it forma a single debt. You can make a single payment per month and not several payments.
  • Pay off of debt is possible over a certain time period and it for you to choose this option during consolidation. You might even get a term of 10 years and if your financial situation permits you can repay the loan faster.