The Four Types of Direct Consolidation Loan Repayment Plans For Student and Working Adults
By James Ma
A very common and convenient way to fund your studies is by taking a student loan. With student loan, you have peace of mind throughout your studies. Still, there will always be a time you have to pay it back including the interest. You should always be prepared for it upon your graduate. One of the options you can consider is getting a Federal Direct Consolidation Loan. This option is available to you irrespective of your current status - still a student or already building your career. This article will review the benefits and the payment plans you can have by choosing a Federal Direct Consolidation Loan.
Simplification is the obvious advantage for consolidation loans for those people who have several different student loans. Convenience is the key pointer to people with many different student loans. By uniting all the loans under one single payment, you will find that it is more convenience and easy to manage as opposed to many repayments to schedule each month. You can choose from four different payment plans, two of which take into account your income - actual or expected.
You don't need to have graduated in order to take advantage of the Direct Consolidation Loan. In actual fact, you will grant more attractive terms such as lower interest rate of up to 0.6% lower than those people who choose to refinance after they have graduated.
Standard Repayment Plan
The Standard Repayment Plan required borrowers to pay at least $50 per month with maximum lifespan of ten years. Who prefer to choose this plan? For those people who want to pay lesser interest because of the shorter term. In general, the shorter the repayment period, the lower the total interest paid. For instance, 8.25% of interest for $15,000 of loan over 10 years will total $22,077 if you pay $184 per month. Total interest is only $7,077. This is considered the lowest interest of all the plans due to the short term.
Extended Repayment Plan
The Extended Repayment Plan is slightly flexible than the Standard Plan. With the same minimum payment of at least $50 per month, the repayment can be extended between 12 to 30 years. As this plan has a repayment period of up to 30 years, it varies according to the amount of loan. It benefits peoples with lower income who like to have a lower fixed monthly repayment and dont mind the higher interest paid over longer period. Lets take the same example of $15,000 loan with 8.25% interest rate over 15 years of $146 monthly payment. That will be equal to $26,196. Sure, under the Extended Repayment Plan the interest borrowers have to pay will be higher than the Standard Plan.
Graduate Repayment Plan
The Graduate Repayment Plan has the same repayment term as the Extended Repayment Plan but the payments will start low and increase every two years. This plan fits in between Standard and Extended Repayment Plan with lower payments initially and will adjust higher every two years to allow borrowers sufficient time to build their income steadily.
Income Contingent Repayment Plan
The calculation under the Income Contingent Repayment Plan includes borrowers annual income and family size. Monthly payments are adjusted annually with a maximum lifetime of twenty five years. The flexibility of this plan enables borrowers to avoid any financial hardship by adjusting the payments accordingly to their income annually.
Its up to the borrowers decision to choose the type of plans, I hope the above explanation will provide a better understanding on direct debt consolidation loan.
About the author
DefaultValue@ThisisdefaultValue.usersshouldfillininformation.com from http://www.FreeArticlesAndContent.com
|
|
Copy This Article
For FREE!!!
You can use this article and copy it on your own website
for free! All you have to do is make sure the article
is copied with no changes and includes the "About
The Author" text. Also please ensure that all url's
are hyperlinked according. Thank you. |
Link To This Article - And We'll
Link Back To Your Website!
You are more then welcome to link to this article! All
you have to do is copy this webpage address from the
address bar and create a link on your website. Please
use the title of this article for your link text. Please
get in contact once you have linked to this article
and we'll link back to you! Thank you. |
|
|
|
Other great articles from this category...
|
Related Sites
|
|
