These include deferment, forbearance, cancellation, and affordable repayment rights.Also, federal consolidation loans generally have lower interest rates.The interest rate must not exceed 8.25% for consolidation loans prior to July 2013.However, the interest rate may be greater than 8.25% if your consolidation application was received on or after July 1, 2013.As you weigh the pros and cons, keep in mind that timing is critical.With just a few exceptions, you get only one chance to consolidate with the government loan programs.The good news is that the Department explains on its web site that if any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date.You can indicate this when you apply, and the consolidation servicer will wait to process your application until the appropriate time.
The Department says that borrowers with joint consolidation loans may repay under the IBR/PAYE plan as long as both spouses qualify with partial financial hardships.Both spouses are jointly liable for the loan and both must request IBR.Problems often arise if the ex-spouses are no longer in contact.APPLYING FOR DIRECT LOAN CONSOLIDATION All borrowers must now apply for Direct Loan consolidation using the web site. It is very important to review this sheet and check to make sure all of the loans you wanted to consolidate are included in the new consolidation loan.(Click espanol to find a Spanish version of the on-line application). Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward.