A very common and convenient way to fund your studies is by taking a student loan. With student loan, you have peace of mind throughout your studies. Still, there will always be a time you have to pay it back including the interest. You should always be prepared for it upon your graduate. One of the options you can consider is getting a Federal Direct Consolidation Loan. This option is available to you irrespective of your current status - still a student or already building your career. There are several different types of payment plans for Direct Consolidation Loan that will benefit different types of people. In this article, we will review all of them.

One of the advantages is the consolidation payment, as the name says it all. For people with several different loans and payments to make, this is the best option. By combining all the loan repayments under one single account, it will become more easily to manage because you have only one payment to make instead of many. You will have four different types of payment plans to choose, two of which will take into account your income.

Borrowers can take advantage of Direct Consolidation Loan even before they have graduated. In actual fact, you will grant more attractive terms such as lower interest rate of up to 0.6% lower than those people who choose to refinance after they have graduated.

Standard Repayment Plan

Borrowers who choose the Standard Repayment Plan must adhere to the requirement - at least pay a minimum of $50 per month. The maximum lifespan is ten years. Those people with higher income may choose the Standard Repayment Plan because borrowers pay the least interest compared to all the four plans with only ten years term. For example, if the loan is $15,000, interest rate is 8.25%, and monthly repayment is $184 for ten years, the total amount is equal to $22,077. The interest is $7,077 for the whole term and this is supposed to be the lowest interest borrowers have to pay of all the plans.

Extended Repayment Plan

The Extended Repayment Plan is slightly flexible than the Standard Plan. With the same minimum payment of at least $50 per month, the repayment can be extended between 12 to 30 years. However, the period varies accordingly depending on the total amount of the debts the borrowers have. This plan benefits people with huge amount of debts and would like a lower monthly payment up to 30 years. The same $15,000 loan will total $26,196 with $146 of fixed repayment for 15 years. Higher interest than the Standard Plan for 15 years.

Graduate Repayment Plan

The Graduate Repayment Plan has the same repayment term as the Extended Repayment Plan but the payments will start low and increase every two years. Who will benefit in this plan? For borrowers who just start their career and expected their income to grow steadily over time. Of course, this plan also incurs more interest than the Extended Repayment Plan.

Income Contingent Repayment Plan

This plan takes into account the borrowers family size and annual Adjusted Gross Incomes (AGI) to decide the monthly payments with maximum of twenty five years. This plan may be the best option for those people whose income is uncertain and want manageable monthly payments allowing them to avoid default.

Its up to the borrowers decision to choose the type of plans, I hope the above explanation will provide a better understanding on direct debt consolidation loan.