muzodating com - Consolidating your debt pros and cons

With a Direct Consolidation Loan, you combine one or more federal student loans into a new loan.

By consolidating your loans, you might end up paying less each month, get out of default, and only have to make one monthly payment instead of many different payments each month.

consolidating your debt pros and cons-44

Or perhaps you're having trouble keeping track of all of your loans.

If any of these situations sounds like what’s happening to you, a federal Direct Consolidation Loan might be a good option to consider.

For many people, it’s then easier to keep track of their student loan balance.

By consolidating, you might get access to a repayment that wasn’t previously available to you.

You can repay a consolidation loan under, for example, a standard repayment plan, a graduated repayment plan, an extended repayment plan, the Income-Contingent Repayment (ICR) Plan, the Pay As You Earn Repayment Plan (PAYE), You can get out of default.

If you’re in default on some or all of you’re the loans you want to consolidate, you may include them in the consolidation loan, but you’ll have to meet certain requirements.

But before you move forward with a Direct Consolidation Loan, consider both the advantages and disadvantages.

If the variable rate loans that you’re consolidating currently have low rates, you can lock in a fixed low rate by consolidating.

The repayment period starts immediately upon consolidation and the first payment will be due in around 60 days.

(Though, if any of the loans you want to consolidate are still in the grace period, you can delay the processing of a Direct Consolidation Loan until the end of a grace period if you make this selection in the application.)If you were in default, your report will reflect that your previous loans were in default, but are now paid in full through the new loan.

(Forgiveness options, though, might also change under the GOP plan.)Again, consolidation will extend the repayment period—perhaps to 30 years—which lowers the monthly payment.

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