Direct consolidation Loan Application Process Guide (Eligibility)

Loan dates are a constant issue one might forget conveniently. Obviously, we don’t pay our loans daily thus remembering all their dates is a trouble in itself. But, when such a situation arises, you might have to consider proper ways of management. In such circumstances, it would be wise to take all that the government has to offer for you. A student with too many student loans has the option to consolidate all of them together into one. This is a permanent resolution that comes directly from the US Department of Education.

What is a Direct Consolidation Loan?

It is a provision that provisions you to tag many small student loans together into a single loan repayment facility. In that way, It works to make loan payment processing better and easier. Instead of paying too many loans, you need to pay just one on a single date every month. A single date is easy to memorize and at the same time, it gives you ample opportunity to be on time for every installment payment. Non-payment on the right date can incur late fees and can terribly impact your credit scores.

These service facilities are available for free and no one needs to pay a penny for making this change. You will need to ensure you consolidate all your loans to create a single direct consolidation loan option.

Additionally, the good news is, you can take out a single consolidated loan to pay up all your fractionated student loans. After the payment is complete, you can start by paying back that single direct loan that you took to pay back the others.

Who is Eligible for it?

Eligible candidates for Loans would need to have,

  1. At least one Direct loan or Federal Family Education Loan (FEEL) under their banner.
  2. The loan can be in any of the stages including grace, repayment, deferment, and default status.
  3. In-school status loans cannot be included in Direct Consolidation loans.

Below are the loan types that can be incorporated under the Direct Consolidation type.

Subsidized Federal LoansUnsubsidized Federal Loans
Federal StaffordFederal Stafford 
Direct SubsidizedTEACH & converted from TEACH Grants
Federal ConsolidationFederal Consolidation
Direct Subsidized ConsolidationDirect unsubsidized Consolidation
Federal Insured Student (FISL)Federal PLUS 
Guaranteed Student (GSL)Direct PLUS
 Direct PLUS Consolidation
 Perkins
 NDSL (National Direct Student Loans & National Defense Student Loans)
 Supplemental Loans for Students (SLS)
 Parent Loans for Undergraduate Students
 ALAS (Auxiliary Loans to Assist Students)
 Health Professions Student Loans (HPSL)
 Health Education Assistance Loans (HEAL)
 Nursing Student Loans (NSL)
 Loans for Disadvantaged Students (LDS)

What are the Application Requirements?

Application requirements for the Direct Consolidation will include the following documents.

  1. The social security number of the applicant is a must
  2. A permanent address must be provided with the application for further communication.
  3. A telephone number and email address are also essential.
  4. Reference from two people is essential to submit including their names, email addresses, telephone numbers and permanent addresses.
  5. Indicate the loan details from different sources and place them one after the other.
  6. Include details of repayment plans and forward borrower understanding.
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Also read: Social Fund Loan Application Process Guide (Are you Eligibile)

How to Apply for a Direct Consolidation Loan application?

The first step for the Direct Consolidation loan application will include the completion of the following steps.

  • The first step after visiting the website will be logging into the account. To login, you must already have an account and if one does not have an account, they can create one. Use your FSA ID and password or combine your password with your phone or email ID.
Login FSA ID
  • Those who don’t have an account can create one with them by pressing on the create an account tab. Add your first name, last name, birth date, and social security number in the first go.
  • Include a username, email address, and password, and then confirm the details. Move ahead and press the Continue tab.
  • Add your permanent address and then enter your mobile phone account access with your alternate phone number.
Direct Consolidation Loan
  • Fill in the rest of the details and once completed, you will have to tap the confirmation link to open the application form in the online portal.
  • The application form will consist of a few essential segments that the candidate will need to address.
  1. Personal information section
  2. Loans that were taken and their details for consolidation.
  3. Reference details of at least two individuals must go in.
  4. Include the loans that you would not like to consolidate thereby separating the loans you are willing to consolidate and unwilling to consolidate.
  5. Include the borrower’s name and social security number and then you must sign in the application form.

Also read: How to check NPC application status? (Complete Guide 2023)

FAQs (Frequently Asked Questions)

What is consolidation loan interest rate?

For the new direct loan consolidation program, your interest rate will be 7.46% and for those in grace, deferment, in-school sessions, and the interest rate can be 6.86%.

Is a direct consolidation a federal loan?

Yes, it is a Federal loan with the power to consolidate two or more two loans into one. They are issued directly from the US Ministry of Education.

How long does direct consolidation loan take?

A consolidation loan can typically take four to six weeks from the date the applicant’s information is received.

Where do I mail my federal direct loan?

You must look for a Direct Loan consolidation service provider in your area by visiting their official site.

Are direct consolidation loans eligible for 10k forgiveness?

Yes, it is definitely eligible for the 10K loan forgiveness plan.

Conclusion

Direct Consolidation loans are a step ahead to better manage your loan options. If there are many loans to pay, you can definitely ring them together under one umbrella and make it more profitable and productive. The consolidation services will also allow you to pay back all those small loans while keeping just one loan visibly in the box for yourself to pay back. Also, you get to enjoy lower interest rates and lower monthly payments and with this loan, the repayment term is a solid 30 years.

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