Taking out student loans seems like borrowing monopoly money for most students as they seem to be far away from reality. There is an increasingly large number of students who took out thousands of dollars on student loans without giving it much thought. Just weeks after their graduation, they start applying for jobs and are face-to-face with the sluggish job market and it is only then that they realize the consequences that they might face when they’re not able to make timely payments towards their student loans. If only repaying student loans would have been as easy as taking them out! This is the most common reaction of the students but alas, they’re left with no other option but take steps to repay their debt through professional options like debt consolidation loans and merging the payments. The entire task of getting out student loan debt is extremely confusing and time-consuming and this is why millions of students grapple with this entire idea.
Knowing the eligibility criteria of taking out debt consolidation loans
Although in the case of Federal education loans, there’s no such minimum or maximum loan amount that is required in order to qualify for a debt consolidation loan but yet there are certain criteria that need to be met. Here are some of them.
- You shouldn’t currently be in school or even enrolled as a part-time student;
- You should presently be making the loan payments or you should at least be within the “grace period”;
- You need to have good repayment history that will not show too many defaults on the loans that you’ve taken out;
- You might have to owe at least $5000-$7500 on the loans.
So, if you can fulfill the above-mentioned criteria, you can easily qualify for debt consolidation through a loan.
The boons of federal debt consolidation – The Direct Debt Consolidation loan
If you have taken out more than one federal educational loan, you might be able to combine them through a direct debt consolidation loan offered b the US Department of Education. Through this loan, you can combine one or more federal education loans into a single loan with a wide array of advantages. Check out some advantages of this loan.
- Single monthly payment: As you take this loan from the US Department of Education, it is most likely that you have to make a single monthly payment to them. You will no longer require splitting your payments among multiple lenders from whom you’ve taken out the loans. You can thereby relieve yourself of the hassles of remembering multiple due dates.
- Drastically lower rates: The rates on the direct debt consolidation loan will be much lower than what you were paying on the individual loans. As the rates will be lower, the monthly payments will also be reduced thereby enabling you to save your dollars.
- Extended repayment term: The repayment term of the direct debt consolidation loan will be longer than the normal loans and this will also spread your payments throughout a stretched period of time, thereby lowering the monthly installments.
- Flexible repayment options: Another benefit of combining your loans through a direct debt consolidation loan is that the government will offer you different repayment options like Income-Based Repayment Plan or the Income Contingent Repayment Plan and you’ll even be allowed to switch from one repayment plan to another according to your changing financial needs. All such benefits will certainly help a student borrower who is presently staying on a fixed income.
Therefore, if you’re someone who has stopped working but is still saddled with student loan debt, you might take resort to the above-mentioned debt relief options. Approach the government for taking out a direct debt consolidation loan so that you’re not forced to lead a financially stressed life.