Direct Consolidation Student Loans

Direct Consolidation Student Loans

5 min read


How much money do you need to make before you can pay off Direct Consolidation Student Loans? There are many factors involved in determining how long it will take to pay off student loans. Most people assume that they have to put 10% down, get a job making $40k per year, work for 30 years, save 20% of their income, etc… However, those numbers don’t even come close to paying off student loan debt.

The way I calculate my payback period is simple:

Step 1) Determine what my monthly payment would be if I only paid back 10% of the total principal balance each month (assuming 8% interest rate over 60 months).

Step 2) Multiply that number by 12 (months) to determine how long it will take me to pay off the entire principal balance

Step 3) Subtract that time from today’s date (date I started repaying student loans)

So, for example, say I had $30,000 in total student loan debt and wanted to pay off that debt in 3 years. If I took out a 5-year fixed rate loan at 9.25%, my monthly payment would be about $335.00. To find out how long it will take for me to pay off $30,000 over a 3 year period, we multiply $335.00 by 12, which gives us $4,050.00. Then, we subtract the current date from the day I began paying back my student loans ($9/12 .75), giving us an estimated repayment of approximately 4.16 years. In reality, it will probably take closer to 6 years for me to repay my student loans. That means it will take me longer than I expected!

I’ve been paying off student loans since high school and now that I’m a full-time college student, I decided I was going to fully understand the ins-and-outs of paying off student loans. If you’re interested in learning about how to pay off student loans faster, check out these articles below:

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Direct Consolidation Student Loans

Direct consolidation student loans – What do they offer?

A direct consolidation loan is used if you have two or more different types of student loans. These loans are consolidated under a single federal government guaranteed loan. You may consolidate up to $23,000 per year at once; however, the more you borrow, the less interest you pay. A direct consolidation student loan is not an option if you make more than $65,500 annually.

Paying off student debt faster

The earlier you graduate and get started paying back your loan balance, the sooner you’ll pay down those student loans. If you decide to go back to school, find out if private schools have financial aid options to help you pay for college.

Borrowing more money

If you want to borrow more money, look into taking out a parent PLUS loan. This type of loan is available to students who demonstrate an exceptional need, based on factors such as family income and expenses, parental employment status, and number of children in the household. Check with the lender to determine whether borrowing limits apply.

Refinancing your student loan

There are some refinancing options available to help you pay down your student loans. Depending on your current loan situation, these options could save you thousands of dollars over time. Look into them before deciding to refinance your student loan.

Student loan forgiveness programs

Student loan forgiveness programs are designed to assist individuals in repaying their education costs. There are several publicly funded and privately run programs. To qualify, you must work toward completing certain requirements, including working in public service positions after graduation. Lenders consider how much you owe and any unpaid balances each month. You may be eligible for forgiveness if you repay what you borrowed while working in a qualifying position.

Direct Consolidation Student Loans

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Direct Consolidation Student Loans

Direct consolidation student loans

A direct consolidation loan is similar to a traditional consolidation loan. However, direct consolidation loans have some additional benefits, including lower costs than traditional consolidation loans. You may get approved faster and pay less interest than if you took out a traditional consolidation loan.

How they work

With a direct consolidation loan, all of your federal government-backed education loans (including subsidized Stafford Loans) are automatically consolidated into a single loan. You’ll still borrow money from your original lenders – just at one low fixed rate. Your total amount borrowed will stay the same throughout repayment. By consolidating your loans, you avoid paying private lender origination fees and saving thousands of dollars in interest payments.

Types of direct consolidation loans

There are two types of direct consolidation loans: an income-based repayment program and an extended repayment program. We don’t cover them here, but we do talk about each type of loan in our separate guide “How to Choose Between Income Based Repayment and Extended Repayment Loan Options.”

What you need to qualify

You must meet certain requirements before you can apply for a direct consolidation loan. If you already have a few of these loans, you will not need to have all of them reamortized. Also, a minimum credit score of 620 is required.

When you should use a direct consolidation loan

If you want to consolidate your loans quickly, then you may wish to consider using a direct consolidation loan. It could save you thousands of dollars over the course of repayment.

Direct Consolidation Student Loans

Direct consolidation loans

The direct consolidation loan is a type of private student loan where the borrower makes payments directly to the lender instead of making payments to a third party loan servicer. A student’s eligibility for a direct consolidation loan varies depending on their level of financial need, credit history and loan amount.

Private student loans

A private student loan is any debt incurred by students while they attend school. If a student is unable to pay off the entire cost of attending college, then he/she may take out a private student loan.

Federal student loans

Federal student loans are usually issued by the government. However, only students who meet certain criteria and have demonstrated financial need qualify for these types of loans.

Public service loan forgiveness

Public service loan forgiveness is a benefit offered to those who work in public service jobs. A portion of each borrowers’ monthly payment would go toward paying down their qualifying student loans. After 10 years of payments, the remaining balance on their loans will be forgiven.

Income-based repayment plan

An income-based repayment plan provides a borrower with a fixed monthly payment based on how much money she earns. These plans are ideal for borrowers who do not make enough money to cover their monthly payments.

Pay as you earn

Pay As You Earn (PAYE) plans require borrowers to make equal monthly payments over the course of 15 years. Once the term of the loan ends, the remaining balance is forgiven.

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