The Direct Consolidation Loan offers borrowers with multiple
federal loans and high balances the opportunity to consolidate (combine) those
loans into a single federal loan with one, usually lower, rate of interest.
loans typically involve repayment over a longer period, which reduces the
monthly payment to a manageable amount. The extended repayment period sometimes
also leads to a higher total amount to repay over the term of
the loan, due to accruing interest. Loan consolidation can offer the following
- Reduce the number of loan payments you must make each month
- Lower your total monthly education loan payment amount
- Help you avoid loan default or poor credit rating
- Help you return a defaulted loan to good standing
Some features of the original loans, such as grace periods and special
forgiveness clauses, may not be a part of the consolidated loan. Terms of
consolidated loans should be examined carefully to ensure that the benefits
exceed the costs for the individual borrower.