Consolidating to a

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After graduation, many people find themselves with multiple federal education loans to pay off.Some may consider consolidation, which makes repayment easier by combining the existing debt into a single loan.Parent PLUS borrowers most consolidate their loans into the federal Direct Loan program if they want to enroll in the only earnings-based plan available to them, income-contingent repayment.Consolidation also opens up the door to extended repayment plans, in which your term can stretch up to 30 years depending on how much debt you have.Federal Student Aid notes that if you are contacted by a consolidation service that requires a fee, this is not a U. College students can take out new loans each year they’re in school, so by the time graduation comes, it’s common to have half a dozen, or more, individual loans.Consolidation doesn’t always work to your benefit, however.For example, if you have Parent PLUS loans for a child and individual loans that you took out for your own education, you shouldn’t consolidate them, says Adam Minsky, a lawyer in Boston who specializes in student debt.

Most federal loans are eligible for Direct Consolidation, including Direct, Stafford, Perkins, and more.

For those with variable interest rates, consolidating to a Direct Consolidation Loan will convert the interest to a fixed interest rate for the life of the loan, based on the weighted average of the interest rates on the consolidated loans.

This fixed rate can provide stability and a lower monthly payment. If your previous loans had any benefits, like interest rate discounts, rebates, or forgiveness, you may lose those benefits in the loan consolidation process.

Repayment of the consolidated loan can begin 60 days after disbursement.

Note: there is no application fee to consolidate your federal education loans.

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