One way to resolve a defaulted loan is to combine your existing federal student loans into a new Direct Consolidation Loan from the US Department of Education (ED).
Disclosure: Student Loan Hero is a free website to help student loan borrowers.Once you consolidate, you are locked into a loan with a fixed interest rate. Therefore, if you consolidate your variable interest rate loans and the interest rates drop the following year, you have "locked" into the higher interest rate for the life of the loan.If you just want to reduce your monthly payment, discuss the federal loan repayment options available with your lender. Single Payment If you have loans with multiple lenders/holders, you send a monthly payment to each.This is called loan consolidation and can help keep you organized and on track with repayment. Department of Education (ED) encourages borrowers with both types of loans to consolidate them into the Direct Loan program.Like many federal loan borrowers, you may have both FFEL and Direct Loans. Once these loans are consolidated, you will have repayment options, some which lower your monthly payments, from which to choose. Consider the advantages and disadvantages carefully before you act.
Consolidation gives you the opportunity to choose one of the U. Department of Education's consolidation servicers (of which, Great Lakes is one) to complete and service your Direct Consolidation loan.