Federal student loan borrowers have the option of consolidating their loans via the Direct Consolidation Loan program offered by the U. That loan is then serviced by the servicer of your choosing – of which Nelnet is one! Consolidating allows you to merge multiple eligible loans into a single loan.Alternatively, there are six other repayment plans to choose from, including four income-driven plans.
Consolidating a federal student loan that’s in default will restore your eligibility for federal loan benefits including deferment, forbearance and loan forgiveness programs.
If you’re consolidating for the purpose of recovering from default, you have to choose an income-driven repayment plan or make three consecutive, on-time, full monthly payments before you consolidate.
There are several ways to get federal student loan forgiveness, and most federal forgiveness programs require that you first make loan payments for a certain period of time.
For instance, you have to make 120 full loan payments while working for the government or a nonprofit to earn forgiveness through the Public Service Loan Forgiveness program.
If your loans are already with one of those servicers, you can stay or choose a new one. Pick a repayment plan for your new consolidation loan.
On the standard repayment plan for direct consolidation loans, you’ll make equal monthly payments for 10 to 30 years, depending on your total federal student loan balance.There are major benefits and drawbacks of federal consolidation; it’s important to understand both because consolidation can’t be undone.[Back to top] Only federal loans in the Direct Loan Program qualify for Pay As You Earn, Revised Pay As You Earn, income-contingent repayment and Public Service Loan Forgiveness.So, for instance: If the average comes to 6.15%, your new interest rate will be 6.25%.Additionally, you’ll get a new loan term ranging from 10 to 30 years.If your loans are through the Federal Family Education Loan program, or FFEL, consolidating them with a direct consolidation loan will make you eligible for those programs.