All of us are aware of the consequences of being delinquent or defaulting on our federal student loans. Though it is a good idea working out the feasibility of repayment before reaching out for a loan, most of the time, we take the loan anyway as there is no other option. When the bill starts coming in, we start to panic and consider options such as Direct Loan Consolidation.

Missing payments kills your credit score making it impossible for you to opt for any credit such as credit cards, mortgages or auto loans in future. Missing interest will also saddle you with a huge cumulative interest. It becomes vital staying on top of your debt by at least making arrangements to pay the minimum monthly amount.

You can apply for IBR or income based repayment on your existing loans. Here the payment you make monthly towards the loan is calculated based on your family size and income. Payment is usually 10% of your income.

Another option is deferment where you can take a temporary suspension from payments till you set right your finances. Those who are in extreme economic hardship, those who are unemployed or those who are in school at least half time can opt for deferment.  

In order to avoid being penalized there are certain steps you can take including Federal Loan Consolidation. Consolidating your loans is an excellent option that can help streamline and minimize monthly repayments. It is possible to extend the term of your loan enough to accommodate payments within your capability and budget.

The weighted average of all your previous loans is taken into consideration to work out the repayment for direct loan consolidation. There are different repayment options you can choose from including the standard, graduated and extended.

Direct loan consolidation does not bring down your interest rate. It only extends your loan term to make repayments easier to manage. direct loans servicing will guide you in managing your loan portfolio and make life simpler.