How does Total Education Indebtedness effect the repayment term of my Direct Consolidation Loan?

If you elect to repay your Direct Consolidation Loan under either the Standard or Graduated Repayment Plans, your repayment term is determined based on your consolidation loan amount and other eligible education loans that are not part of your Direct Consolidation Loan as long as you provided information about those loans on your application. Here are examples of how Total Education Indebtedness effects the repayment term for your Direct Consolidation Loan.

Your Existing Loans:

Loan A	$  2,500
Loan B	$  6,000
Loan C	$  2,500
Loan D	$  7,500
Loan E	$  7,500
Loan F	$13,000
Total Outstanding Amount	$39,000

Examples 1 and 2 assume that you reported all your outstanding education loans on your consolidation application.

	You Consolidate:	Your Direct Consolidation Loan Amount	Your Other Eligible Education Loans	Your Total Education Indebtedness	Your Direct Consolidation Loan Repayment Term (approx.)
Example 1:
	Loans A and B	$  8,500	$30,500	$17,000	15 Years
Example 2:
	Loans A, B, C, D and E	$26,000	$13,000	$39,000	20 Years

In Example 1 you consolidated less than one-half of your eligible outstanding loans. As a result, we base your repayment term on your Direct Consolidation Loan amount plus other eligible indebtedness only in an amount equal to your new Direct Consolidation Loan:

Direct Consolidation Loan ($8,500) + Other Eligible Education Loan Allowance ($8,500) = Total Indebtedness ($17,000)

In Example 2 you consolidated more than one-half of your eligible outstanding loans so the calculation of Total Education Indebtedness includes all of your other eligible education loans. The result is a longer repayment term than in Example 1.

Direct Consolidation Loan ($26,000) + Other Eligible Education Loan Allowance ($13,000) = Total Education Indebtedness ($39,000)

Finally, Example 3 illustrates the impact on your repayment term if you did not report all of your outstanding education loans on your Direct Consolidation Loan application. Your repayment plan term is shorter than in Example 1.

	You Consolidate:	Your Direct Consolidation Loan Amount	Your Other Eligible Education Loans	Your Total Education Indebtedness	Your Direct Consolidation Loan Repayment Term (approx.)
Example 3:
	Loans A and B	$8,500	$0	$8,500	11 Years

Remember that the longer your repayment term the lower your monthly payment will be. However, this usually means that the total interest paid during repayment will be higher. Only you can decide what plan is best for you. And, you can change plans later if your plan no longer suits your needs.