(We’ll get into the details of those options later on.) No matter what strategy suits you best, the idea is the same: Lump together all or most of your debts into a single payment as a way to save money, simplify your finances … For example, if you have multiple high-interest credit card debts and outstanding medical bills, you may want to take out a personal loan to repay those debts.
Then you can focus on repaying that personal loan, which requires just one monthly payment and, ideally, has a lower interest rate than what you were paying across multiple debts (it may not have a lower rate, but it’s in your best interest to find the lowest one you can).
When you're choosing the term of a loan, consider the total amount of interest and fees you’ll pay.
A loan with a longer term may have a lower monthly payment, but it can also significantly increase how much you pay over the life of the loan.
Above all, the approach has to match the need and the comfort level of the borrower.
Some people prefer a debt management plan, while others benefit from simplified singular payment of a consolidation loan.
Whom do I contact if I have questions about consolidation?
There is no cap on the interest rate of a Direct Consolidation Loan.
Top will let you know when the first payment is due.
If any of the loans you want to consolidate are still in the grace period, you have the option of indicating on your Direct Consolidation Loan application that you want the servicer that is processing your application to delay the consolidation of your loans until closer to the grace period end date.
Once your loans are combined into a Direct Consolidation Loan, they cannot be removed.
If you want to lower your monthly payment amount but are concerned about the impact of loan consolidation, you might want to consider deferment or forbearance as options for short-term payment relief, or consider switching to an income-driven repayment plan.
You’ll select a repayment plan when you apply for a Direct Consolidation Loan. Top You apply for a Direct Consolidation Loan through Student After you submit your application electronically at Student or by mailing a paper application, the consolidation servicer you selected will complete the actions required to consolidate your eligible loans.