Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.


By Jean Maryland

Are you struggling with overwhelming debt? Debt consolidation will allow you to combine multiple federal parenting or educational loans into a single large loan. Compared to the difficulties faced in making multiple payments every month, consolidation will make your life easier by enabling you to make only one monthly payment.

When it comes to direct consolidation loan of federal educational loans, there is no such additional application fee. If you are contacted by a third party organization that offers you consolidation loan for a fee, you should not accept it. In case of educational loan consolidation, you have the scope of dealing directly with the consolidation services of U.S. Department of Education.

Applying for a direct debt consolidation loan

Before applying for Direct Consolidation Loan, you need to do some groundwork. Here is what you should know to get started:

Should you consolidate your loans?

Loan consolidation is a debt refinancing method which can simplify loan repayment process by centralizing all loans around a single bill. It can also significantly lower your monthly payments and give you an extended repayment span, usually up to 30 years.

However, if the length of the loan is increased, the repayment may be high altogether. So, compare the current monthly payments to what you will owe after consolidating all your loans. If the latter seems like a better choice, you should go for it.

Which types of loans can be combined for consolidation?

Almost all types of parenting loans are eligible for consolidation. However, some types of private loans cannot be consolidated. If you are a defaulter, then there are a few baseline requirements that you need to meet before you can go ahead and consolidate loans.

A PLUS loan, which is in the name of a parent of a student who is dependent on him or her, cannot be transferred to a student's loan through consolidation at companies consolidation your debts. So, a student who applies for a loan consolidation cannot include if there is a PLUS loan which the parent took for the education of a dependant child.

What types of loans can be consolidated?

Most of the parenting or federal student loans along with the following few can be consolidated.

- Direct Subsidized Loans

- Unsubsidized Federal Stafford Loans

- Subsidized Federal Stafford Loans

- Supplemental Loans for Students (NASDAQ:SLS)

- Direct PLUS Loans

- PLUS loans from the Federal Family Education Loan (FFEL) Program

- Health Education Assistance Loans

- Federal Perkins Loans

- Federal Nursing Loans

When to consolidate loans?

Generally, students are eligible to consolidate their loans after leaving school, post graduation, or upon dropping below the half-time enrollment. Parents who are looking for consolidation of loans can do it anytime after getting clearance from the concerned lender and also upon meeting all criterions for consolidation.

What are the general requirements for consolidation of loans?

If you are thinking of Direct Consolidation Loans, you must have at least one direct loan, which is in the repayment phase or in grace period. If you are planning to consolidate a loan which is defaulted, then you should first make a satisfactory repayment agreement on that loan with the provider before consolidating. You must also agree to pay the Direct

Consolidation Loan under:

 Income based repayment plan

Pay as you earn plan or

Income contingent repayment plan

There are various repayment plans you can choose from. Each plan is designed to meet the personal needs of all individual borrowers. You can get detailed information about the repayment terms and conditions from the provider to compare all available options and choose the best.

Author Bio: Jean Maryland is a debt consolidation consultant cum financial writer, who used to write reviews of companies consolidation your debts, and she also writes articles for the borrowers who want to enjoy a hassle-free debt consolidation experience.