With an average balance of ,400, student debt is a big part of the average college graduate's life.
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Direct consolidation loans are now the only type of federal student consolidation loan.
Under the Direct Loan Consolidation Program, you can consolidate Subsidized and Unsubsidized Stafford Loans, Supplemental Loans for Students (SLSs), Federally Insured Student Loans (FISLs), PLUS Loans, Direct Loans, Perkins Loans, Health Education Assistance Loans (HEALs), and just about any other type of federal student loan.
Simply put, this is the process of combining your multiple student loans into a single, bigger loan, possibly with a new lender.
You’ll no longer owe the original loans, and since this consolidated loan is new, it will come with a new interest rate, a new payment policy, and new terms and conditions.
For example, under the Public Service Loan Forgiveness Program (PSLFP), your Direct Loan balance may be eligible for forgiveness after 120 payments if you’ve worked in the public sector that entire time.
Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.
This is often the reason that people cite when they say you shouldn’t combine federal and private loans.
But before you dismiss the idea of refinancing, you should first take a look to see if any of these benefits apply to you.
This is particularly true for grad school borrowers who use unsubsidized Direct loans and Graduate PLUS loans to finance their education.
offer benefits and protections that do not transfer to private lenders.