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Both
Direct Loans and FFELP loans are federally backed
Stafford loans and offer all of the perks of the federal
loan program such as deferment, forbearance, a low
interest rate set by the federal government, and the
ability to consolidate student loans through the federal
loan consolidation program.
Students don’t have a say about
which type of loan they’ll receive while in school. It is the
school, not the borrower that dictates which type of loan will be
issued. However, when it’s time to consolidate student loans,
borrowers have a choice about their consolidation loan. Though
similar, there are a variety of differences between a Direct Loan
consolidation and an FFELP student loan consolidation that are worth
considering before signing on the dotted line:
Money saving
discounts
The
real difference between obtaining loans through the Department of
Education vs. a private lender are the money saving discounts. Like
any free market competitive industry, there tend to be more perks
for you when obtaining your loan through an FFELP lender. Because
interest rates on federal loans are set by the government and
non-negotiable, FFELP lenders compete for your business by offering
additional money saving discounts for on-time payments and automatic
withdraw.
Direct consolidation vs. FFELP student loan
consolidation
Because most students take out multiple loans throughout their
college years, the majority of students choose to consolidate
student loans after graduation. Both Direct Loans and FFELP loans
are eligible for student loan consolidation, but again, private
student loan consolidation companies tend to have more money saving
and customer satisfaction perks than are available with Direct Loan
consolidation. One other major difference is that defaulted loans
can be consolidated in a Direct Loan consolidation, a feature not
available in an FFELP consolidation.
Need
to
consolidate student loans?ScholarPoint offers a range of
money saving discounts including a 1.0% interest rate reduction
after 24 consecutive on time payments and a 0.5% discount for auto
payment. Discover the ScholarPoint difference today!
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