Consolidating direct federal student loans
The interest rate on the federal consolidation loan would be This would then be rounded up to the nearest one-eighth of a point, or 3.75%.
Since July 1, 2013, the interest rate on new federal consolidation loans is no longer capped.
Federal consolidation loans allow borrowers to combine several federal student loans into one loan to streamline loan repayment.
The monthly payment amount may decrease because repayment can be spread over a longer time period.
Before you consolidate, consider the following pros and cons: Note: Just remember, you must continue making payments after submitting your application until you receive notice from your servicer that underlying loans have been paid off.
You have the option to select the servicer of your choice (of which, Nelnet is an option) After your new Direct Consolidation Loan is complete, you may still add more eligible loans to your existing consolidation.
A consolidation calculator may be used to calculate the interest rate on a federal consolidation loan.The Higher Education Reconciliation Act of 2005 repealed this provision, effective July 1, 2006, because of problems that occurred when the married borrowers subsequently got divorced.There was no way to unravel the joint consolidation, so the joint consolidation loans became a tie that binds beyond divorce.Other forms of consumer credit, such as credit card debt, mortgages and auto loans, may not be included in a federal consolidation loan.Only one borrower’s loans may be included in a federal consolidation loan.