Many students take out a Federal Direct Student Loan to help pay for tuition, books and living expenses while in college. Although these loans have very good rates and terms, they must still be paid back like any other debt. Many people get direct student loan consolidation to help make repayment easier. Since government loans tend to be more flexible than other loans, there are many different repayment options for Federal Direct Student Loan consolidation.
The standard repayment plan for a Federal Direct Student Loan requires fixed monthly payments of the same amount for up to ten years. The extended direct student loan consolidation program allows borrowers to pay smaller amounts over as many as 30 years. This Federal Direct Student Loan consolidation plan is good for people who do not want to shell out as much money each month, but it means paying more interest over time.
Graduated repayment is another option for Federal Direct Student Loan borrowers, which usually allows them to pay their loans off in 12 to 30 years. The main difference between graduated and extended repayment is that the monthly payment amount will increase every two years, as borrowers hopefully begin to earn more. There is also an income contingent direct student loan consolidation plan, which is based on gross annual income, family size and the amount owed. This type of Federal Direct Student Loan consolidation is usually repaid in 25 years.
All of these options make it easier for students and graduates to find a repayment plan that will work for them, and it's always possible to pay the debt off earlier or change payment plans if necessary.