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Direct Student Loan Consolidation - Lower Installments, Improved Credit Score

Written By adi mulias on Friday, October 28, 2011 | 4:51 AM

Students takes a loan for a degree from college training. But, otherwise, without a loan, the installment amount might be kept for other necessities in life, like a great house, or a new car. A student must think about a direct student loan consolidation in case repayment is causing problems in his budget and credit score.

With direct student loan consolidation, a new loan having a lower, fixed interest rate can be used to repay the old, high interest rate loans. A direct education loan consolidation may solve more problems by clearing your old loans and providing you with a start with a new loan. Direct student loan consolidation lowers your rate of interest, thereby, lower monthly payments, and making deferment and forbearance possibilities. When old loans are paid off using loan consolidation, they increase your credit score by showing up in your credit report as paid off.

There are four repayment choices for a direct student loan consolidation:



Standard Repayment Plan - gives a fixed monthly payment amount for approximately 10 years.

Extended Repayment Plan - gives a fixed payment amount for 12 to 30 years. The monthly amount is lower due to the longer payment time.

Graduated Repayment Plan - the payment period is between 12 to 30 years, but the monthly repayment amount increases every two years.

Income Contingent Repayment Plan - payment is revised based on gross income, family needs, total direct education loan debt, and the repayment is spread over 25 many years.

If you can pay off your current loan, a direct student loan consolidation may not be worth over time to extend your payments. Otherwise, a direct student mortgage consolidation is strongly recommended. If you still go in order to school, and you apply for a loan consolidation, you might get a 6-month grace period before repayment.
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