Direct Consolidated Loan is a government-sponsored lending program sponsored by the Department of Education that helps student borrowing borrowers consolidate several federal educational loans into a new direct consolidation loan.
The word “consolidation” itself is difficult, so this is how the process actually works … After your application for a direct loan consolidation program is approved, the Department of Education issues you a new federal education loan and pays your existing federal education loans to your full federal credit service providers.
Uses a weighted average interest rate on your current loans, so you will not save or charge additional interest, but with the same amount over time
After consolidation, you can choose various alternative repayment plans with terms ranging from 10-30 years
Only available for federal student loans.
Advantages of a direct consolidation loan
You only have one payment per month for several payments.
Only 1 federal credit provider or several federal lenders
May reduce monthly payments by extending the loan term to 20 or 25 years with various alternative repayment plans
If you have a default loan, Direct Consolidated Credit can recover a loan.
Disadvantages of a direct consolidation loan
If the loan term has been extended, you are likely to charge additional interest on the loan repayment.
If you use a Direct Consolidation Loan to recover the unpaid student loan, any negative credit reports will remain in your credit report, and when you spend a 9-month traditional loan rehabilitation (which will remove the student loan status by default from your credit report)
Student loan recommends:
A direct consolidating loan can be an excellent tool to simplify the repayment process and even help lower your monthly payments until your income or employment situation improves. In addition, a direct consolidation loan can improve your cash flow and reduce the debt-to-income ratio, which increases the available credit for mortgage loans, car loans, and refinancing student loans.
But keep in mind that if you change the loan term from 10 years to 20 years, you will end up paying twice as much as expected, originally planned!
For more information :https://studentloansresolved.com/