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Understanding Government Debt Consolidation Loan
Programs
A government debt consolidation loan can
help you consolidate your debts and alternate your repayment plans to
make it more affordable and thus can increase your chances to pay back
all your debts on time.
There are consolidation loans provided by various government programs
that enable you to make one monthly payment rather than making payments
to 3 or more creditors. These loans work like other private
consolidation loan programs. If you have to pay off multiple loans and
are looking for a new loan to consolidate your debt then look no
further...
Student Loan Consolidation and Repayment Plans
Student loan consolidation program is the readily available consolidation loan
programs from the government. The federal government provides many loan
programs to aid students or parents in debt as they often owe more than
one federal educational loan. The Direct Loan (DL) Program and the
Federal Family Education Loan (FFEL) Program are two programs that fall
under the Higher Education Act (HEA); both allow loan consolidation to pay off
multiple federal student loans.
As a part of the Direct Consolidation Loan Program, the old federal
education loans are paid by the Department of Education and after that
it issues a consolidated loan. The FFEL is another program
where the funds come from private
lenders that are subsidized and supported by the Department of
Education. You repay the FFEL consolidation loan to the private lender
that made the loan if you consolidate with the program.
In addition to the standard ten-year repayment, government debt
consolidation loan programs offer four repayment plans: standard plan,
extended payment plan, graduated payment plan (DL only) and income
contingent repayment plan (FFEL only). Each plan has different features
that offer flexibility for borrowers. However, you usually can stick to the standard
10 year repayment plan.
Advantages of Government Debt Consolidation Loans
A government consolidation loan can benefit you in a number of ways. By
consolidating your loans you can alternate repayment plans to make it
more affordable and thus can increase your chances to pay back all your
debts on time. Another plus point of a consolidation loan is that you
can simplify your money management by paying only one fixed payment
every month.
Even though the new interest rate on a consolidation loan is almost the
same as the interest rates on the old loans you can still have a chance
to lower the cost of the loan by shopping around for a better discount
on the loan interest rates and better rebates on the fees.
So, if you are students or parents with many federal education loans you
can really benefit from
government debt
consolidation loans as you can use it to consolidate all your
federal student loans. Be aware, however, there are few problems on
consolidation -- for instance, loss of the grace period or the high cost
of extended repayment -- that you should take into account when
considering a government consolidation loan.
Back to Government Grants Page
Government Debt Consolidation Loan to Debt Firms
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