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A good number of students who pursue college education have to shoulder the responsibility of a student loan. The federal government has made provisions to ensure that lack of sufficient funds does not hinder students from pursuing higher college education; the students’ woe do not here. Students who are financially lesser privileged, have to also go through nightmare of making loan repayment on time.

The FFEL program (Federal Family Loan Program) which offers loans through banks and other private lenders may not be an affordable option for all. Many consider it too expensive and unpredictable as it is closely tied to the highs and lows of Wall Street. To overcome this problem the U.S. Department of Education offers debt consolidation program to students.

Advantages

The advantage of the direct consolidation loan offered by the U.S. education department is that you can combine all your loans together and bring it under a single repayment plan. There is no consolidation fee and no minimum amount required for the loan. Monthly repayment amount is decided according to the student’s repaying capacity. Students are given four repayment options namely, Standard Repayment Plan, Graduated Repayment Plan, Extended Repayment Plan and Income Contingent Repayment Plan.

If all your loans are direct loans, you can apply for a debt consolidation over the phone itself. Or you log on to the federal direct loan website https://loanconsolidation.ed.gov/ and apply online. The other way is to download the application form, fill it up and mail it to the department of education.

The Future

The new government has made a debatable proposal to move most student lending programs into the hands of the U.S. Education Department. If this proposal comes into act, the federal students’ loans will become more reliable, and save billions of dollars for taxpayers. With the budget proposal for the fiscal year 2010 starting in October, students need to wait and watch for any added benefits.