Direct consolidation is a loan that generally combines more than two loans into one loan. There is an interest rate that needs to be paid on this. The new rate of interest that a person has to pay depends on the median rate of the loans that are combined. Not all are entitled to these loans. The applicant has to qualify and fulfill certain criteria to get the loan.
There are numerous privileges that an applicant gets with the Direct Consolidation Loan such as lower monthly payments as the term of the loan is extended to generally 30 years. There are several payment options that an applicant gets for the loan. In addition to this, the candidate also gets a lower rate of interest rate. The candidate also gets forgiveness options access. With this, the applicant has to pay only a single payment so there is no chance that the applicant forgets about the payments.
With loan consolidation, a person gets access to other additional repayments of loan and also the forgiveness programs. The borrower can also cancel the repayments of the leftover principal and interest that is owned on a loan(student). The applicant does not need to pay income tax along with the loan forgiveness on the loan payments which are canceled.
What is a Direct Consolidation Loan?
The DSL is a federal loan that generally amalgamates two or three education loans. There is a fixed interest rate that the applicant pays for a loan. This is basically an average rate of loans that are consolidated. There is no extra cost that the borrower needs to pay for the loan. The application form is to be paid and that comes with no more charges.
There are certain criteria to get entitled to the Direct Consolidation Loan. The private loans are not qualified under this. This is a relief that the government has done for the candidates due to the pandemic. This gives privilege to the people in lowering their count of loan payments that are done every month by combining all the payments into a single one. The U.S. department of education will facilitate these loan payments and there is no extra payment for this.
Who is Eligible for it?
All the candidates who fulfill the mentioned prerequisites are qualified for direct consolidation. These are as follows:
- The borrowers who want to consolidate have to finish their schooling.
- The applicants who have taken private loans are not entitled to this.
- The applicant who has withdrawn from the school can consolidate the loan.
- The candidates who have achieved half-time student status are qualified.
How to Apply for direct consolidation loan application
An individual has to apply for the direct consolidation loan application by following the certain given steps. So, scrutinize the steps:
- The first thing that the applicant needs to do is to collect all the relevant data such as interest statements, billing, lender addresses, and all other information.
- The applicant then has to register for a PIN. For that visit the PIN web page.
- Further, fill out all the obligatory details in the application at (loanconsolidation.ed.gov/AppEntry/apply-online/appindex.jsp)
- Next, the applicant can also call (800-557-7392).
- Also, the candidate can also mail at ([email protected])
- Once the application is received, then it is reviewed and loan holders are contacted.
- Further, the statements of the loan are generated and IRS is contacted.
- Next, the loan is paid off by the federal government.
- At last, a loan account is set up by the DLSC( Direct Loan Servicing Center) and after that, a person is ready for repaying the amount.
What are the Application Requirements?
There are a few application requirements that an applicant has to fulfill for the application of the direct consolidation loan. Let’s have a look:
- The applicant has to add all the obligatory details in the application.
- Generally, the candidate has to provide two references and it is mandatory. (The references should not be residing with the applicant but must know him/her for three years).
What is the direct consolidation loan interest rate?
The interest rate that is charged for the loan is rounded up to approximately one-eighth(nearest).
Is a direct consolidation loan a federal loan?
The direct consolidation loan is a kind of federal loan. In this loan, around two to three loans(federal) are combined together.
How long does a direct consolidation loan take?
Generally, around 30 to 45 days are taken for the loan.
Where do I mail my federal direct consolidation loan application?
The applicant can mail at ([email protected]) for the loan application.
Are direct consolidation loans eligible for 10k forgiveness?
In most cases, the direct consolidation loans are not qualified for the 10k forgiveness.
Digital marketer by profession and author by interest. He is the mind behind starting this blog. While surfing the internet, Ajay found that many people are facing problems while filling up the application forms. To overcome this, Ajay decided to start a blog so that users will get proper guidance on how to apply for any online/offline applications.