Direct Consolidation Loan

Direct Consolidation Loan is a consolidation of several federal loans into one loan. As the result, you have to make a single monthly payment instead of one.

To consolidate or not to consolidate your loan

The most important question of Direct Consolidation Loan is whether one should at all consolidate all the direct loans that one has taken. The result of consolidation of loans would mean lower payments over a span of 30 years. You could also have access to alternative repayment plans which probably would not have been possible before. However, the flip side is, you would be making more payments and paying greater interest. Before switching to a consolidated loan, you should make a comparative analysis of current monthly payments to the future monthly payments if you consolidated our loan.

You would also be in a position of losing borrower benefits attached with your original loans. You might lose benefits like interest rate discounts, loan cancellation benefits, and principal benefits. Another important point that you should keep in mind is that once you convert your loans into a Direct Consolidation Loan, you cannot have it removed. 

 Types of Loans which can be Consolidated

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Subsidized Federal Stafford Loans
  • Unsubsidized Federal Stafford Loans
  • Direct PLUS Loans
  • PLUS loans from the Federal Family Education Loan (FFEL) Program
  • Supplemental Loans for Students (SLS)
  • Federal Perkins Loans
  • Federal Nursing Loans
  • Health Education Assistance Loans
  • Some existing consolidation loans

Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment. For latest guidelines see official website of StudentAid:

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