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What are the terms for a consolidated loan?

Students all over are facing tough economic times today and often take out during their school career a number of federal loans. Most of them find it impossible managing the cumulative monthly payments for all the loans at once. Federal Loan Consolidation is one of the best options for them as it allows them to consolidate all loans into a single loan either from a commercial lender or from the US Department of Education. Direct Loan Consolidation offers them excellent terms that are extended to make their monthly liabilities more manageable. 

Rate of interest for consolidated loans are usually fixed just as with the federal loans. Regardless of their credit history, the interest rate is calculated using the same formula for all borrowers. If you are a parent looking to consolidate the FDLP PLUS loan, then you will be subjected to a modest credit check. However, no prepayment penalties or fees will be charged on these loans. 

direct loan servicing will take the weighted average of rates of interest on the loans that are being consolidated to calculate the interest rate on the direct loan consolidation at the time of consolidation. 

Maximum specified rate varies every year but has been relatively constant at about 8.5% for the past few years. Rate of interest is rounded to nearest 1/8th percent and does not usually exceed the maximum rate. 

Direct loan consolidation is offered for a time period of 10 to 30 years depending entirely on the consolidated amount and repayment option chosen by the borrower. Borrowers can choose from different repayment options such as extended payments, fixed payments, income contingent payments and graduated payments. Borrowers have the flexibility of shifting between payment options at any time during the loan period. Loan repayment options can also be changed any number of times during the loan tenure.