Texas Land Board Article

Direct Student Loan Consolidations

There are four plans in the direct student loan consolidation program. The goal of all of them is the same and that is to lower your monthly payments to make paying back your student loans more manageable.

Direct Student Loan Consolidations: Standard repayment plan

This student loan consolidation program combines all of your student loans into one single loan and offers you a set payment amount spread out over a period of time up to 10 years.

Direct Student Loan Consolidations: Extended repayment plan

This consolidation program works just like the standard plan except the life of the loan is longer and can be extended for 12 - 30 years. The exact length of time is determined by the amount that you need to borrow to consolidate your loans. This helps to further lower the monthly amount owed since the payments are spread over a longer time period, but it does increase the total amount that you pay back in the end.

Direct Student Loan Consolidations: Graduated repayment plan

This consolidation plan is also for a longer loan life of 12 - 30 years but it is different in that the payment amount increases every two years. This type of loan is helpful if you are starting a new career and are not making much money right now but your projected salary will be higher as time goes on.

Direct Student Loan Consolidations: Income contingent repayment plan

This particular student loan consolidation program was created for those who have families and are employed. This program takes into consideration your income, loan debt, and number of people in your family to come up with a repayment plan that is spread out in equal payments offer a period of 25 years.

If you find that you are having trouble meeting your monthly student loan consolidation payments, it is important to look into finding a solution before your credit gets ruined by late or defaulted payments. If your situation is temporary, you may qualify for a deferment of a monthly payment to help you get on track. If your budget is constantly strapped month after month, getting a student loan consolidation is probably the best thing you can do to save your credit.

If you take out your direct student loan consolidation before you graduate, you may possibly be able to defer making any payments on your new loan for six months. If you have a mountain of student loans and you haven’t graduated yet, you may want to talk your situation over with the financial aid office of your university to see what course of action will help you manage those monthly payments when it is time to start repaying those student loans.