Should I consolidate my federal student loans into a federal Direct Consolidation Loan? | Consumer Financial Protection Bureau

If you are thinking about consolidating your federal scholar loans into a federal Direct Consolidation Loan, here are some questions to ask yourself :

Do you want to combine more than one federal loan into a single payment?

Loan consolidation can simplify your monthly payments by rolling multiple loans into one lend. After consolidating your loans, you will only have to make a payment to one student lend servicer. This may make it easier to keep path of your student loans .

Do you want a fixed interest rate loan instead of a variable rate loan?

Some older federal student loans have a variable interest rate. If you have a variable rate scholar loanword, your interest rate can go up or down over time. direct consolidation Loans have a fixed matter to pace, meaning your interest rate will not change over the life of the loanword. The fix sake rate for a Direct Consolidation Loan is the weighted average of the matter to rates of the loans being consolidated, rounded up to the nearest one-eighth of a percentage. While consolidating your loans may slenderly increase your interest rate, it will lock you into a sterilize interest rate, so your modern payment won ’ triiodothyronine change.

Do you want access to different repayment options?

A send Consolidation Loan could make you eligible for several repayment plans that may not be presently available to you. If you have federal loans through the Federal Family Educational Loan ( FFEL ) platform or the Perkins lend platform, you may be able to consolidate those loans to qualify for respective repayment programs. Consolidating federal loans may cause you to give up other benefits. Borrowers with Perkins loans should talk to their servicers about the risks associated with consolidation .

Do you want to qualify for Public Service Loan Forgiveness?

New! The U.S. Department of Education announced a change to PSLF program rules for a express time because of the COVID-19 national emergency. Under the new rules, once you take the necessary steps, any anterior union student loanword payment made will count as a qualify payment, careless of loanword type, refund plan, or whether the payment was made in wide or on fourth dimension. All you need is qualifying employment.

This change will apply to student loanword borrowers with mastermind Loans, those who have already consolidated into the direct Loan Program, and those who apply to consolidate into the send Loan Program by Oct. 31, 2022. For more information visit studentaid.gov/announcements-events/pslf-limited-waiver. note : by and large, Parent PLUS loanword are not eligible for the PSLF Limited Waiver. Contact your servicer to learn more about your options.

Do you want to get out of default?

consolidation allows you to pay off default loans with a raw lend and new repayment terms. If you can not afford to repay your lend in wide, consolidation is the fastest way to get out of default option and enroll in one of the U.S. Department of Education ’ s other payment plans. Warning: Consolidating federal loans may cause you to give up other benefits. Borrowers with Perkins loans ( which qualify for a offprint cancellation program ) or those serving in the military should talk to their servicers about the risks associated with consolidation. TIP: If you ’ re planning to enroll in an income-driven refund plan and work with multiple servicers, it might be easier to have a consolidation loanword, so you won ’ t need to submit documents about your income and family size to multiple servicers .

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