Changing Direct Loan Consolidation Repayment Plans

March 5th, 2010 by admin

 

Many opt for consolidating one or more of their existing student loans with Direct Loan Consolidation to make their monthly commitments simpler and easier to handle. This loan consolidation program offers borrowers great relief as they can choose from a range of repayment plans suited to their capacity.

Borrowers can also benefit from renewed deferment and maybe even reduced instalment amount every month with extended loan period. Whether it is a direct or Private Loan Consolidation, you can bring all your existing loans under a single platform and make just a single payment.

Repayment plans can be changed at any time during the loan period. If you are under the ICR repayment plan however, it is necessary to make at least three monthly instalments consecutively before you will be allowed to change over to another plan. During the direct consolidation loan repayment period, borrowers can change their repayment plan options any number of times.

If you want to change over to the ICR plan, you can do so at any time with the help of the direct loans servicing center. Under this plan, a maximum of 25 year repayment period will be offered to you. After completion of 25 years, any loan amount that is not paid is usually forgiven. Other repayment plans prior to changing over and any hardship deferment period will also be included in the 25 year period. A tax may be levied for the amount that is forgiven as it is considered to be an income.

It is possible to change over to another direct consolidation loan repayment plan only if the newly chosen plan has a longer period of repayment than the repayment time you have already spent. The time spent by borrower in repayment so far is subtracted from the new repayment plan term allowed to determine the new repayment terms.

 



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