Only a fraction of the world’s population will ever have the opportunity to go to college. Seeking higher education is a great privilege, but, like most privileges, it bears its share of responsibility. Graduates are expected to go on and put their education to good use, becoming productive members of society and giving back in any way they can. A big part of giving back means repaying their federal direct student loan. Taking out student loans have become commonplace for contemporary students because today, the cost of education often exceeds what students are able to pay for it.

A mere six months after graduation, former students must begin repaying their loans. This can be especially difficult for those who have yet to find their first job, and in these economic times it is not uncommon for students to search for months and sometimes a year before finding a job. Even if students have found their first job, they may not exactly be rolling in money; they may find it difficult to make loan payments each month. It is a good idea to seek a financial counselor to discuss your options.

It is usually the case that students take out multiple loans, which means that many turn to consolidators after they graduate. Consolidating loans can greatly reduce the monthly payment which must be made each month, even if consolidating means that students will end up paying more in interest over time. However, most do not have the luxury of repaying these loans without consolidating. Consolidating means students lengthen the time they spend repaying the loans; without consolidating students are required to pay back loans over a much shorter period of time. Without consolidating, a student may have between 5 and 10 years to repay all loans, but after consolidation that time may be extended to 25 years or more. Since most students are likely to consolidate, they face a choice in whether to use federal or private consolidation. This may not be much of a choice, however, because if a student has taken out federal loans, that student should use federal consolidation.

If you have determined that you cannot afford to repay your loans without consolidating, your next step is to check the website of the US Department of Education to verify whether your loans qualify for consolidation or not.

A new interest rate for your consolidated debt will be determined by that of your current loans, making your most important consolidating choice your repayment schedule. That is, you need to decide whether you want to repay the loans over ten years, or twenty years, or however long it will take you depending on your situation. If you want to pay the least amount of money in accrued interest, it is a good idea to select the shorter payment schedule if you are able to do so. This may not be possible, as it means that your monthly payments may not be manageable. The repayment schedule will rely quite a bit on what a student earns in annual income.

Author Bio: Ellie Lewis recently spent time researching student loans. Her son is going to apply for a federal direct student loan.

Category: Finances
Keywords: student loans,federal direct student loan