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Government Debt Consolidation Loans
Government debt consolidation loans are
one good option for consolidating your debts if you have to pay off
multiple loans. These consolidation loans provided by various government
programs enable you to make one monthly payment rather than making
payments to 3 or more creditors. These loans work like private
consolidation loans, however, unlike private consolidation you don't
have to pay fees to consolidate your loans.
A popular form of government-backed consolidation loan is federal
student loan consolidation. The Higher Education Act (HEA) allows a loan
consolidation program under both the Federal Family Education Loan (FFEL)
Program as well as Federal Direct Loan (FDL) Program. With the help of a
new consolidation loan from government you can consolidate Stafford
loans, Plus loans, and Perkins loans into a new single loan.
Reasons to Use a Government Debt Consolidation Loan
By consolidating your federal educational loans, you can simplify your
monthly payments by paying only one fixed payment every month. As the
interest rate is fixed the loan can make financial planning much easier
and increase your chances to pay back all your debts on time. What's
more, you can choose a repayment plan that can help make your monthly
payments more affordable.
Even though the rate of interest for government consolidation loan is
the weighted average of the interest rates of old loans - there is
almost no interest rate reduction - you still have a chance to switch
lender that offer a better discount on loan interest rates and a better
rebates on other fees.
If you've already exhausted the deferment and forbearance options on
your existing loans debt consolidation can help reset them with a new
set of deferments and forbearances. This is especially helpful if you
are a medical student who is looking for an economic hardship deferment.
A debt consolidation loan can help you get up to another three years of
deferment.
Consolidating Student Loans with a Government Loan
You can get an FFEL consolidation loan to consolidate your educational
loans during your grace period, once your loans have entered repayment,
or during periods of deferment or forbearance. To qualify for a Direct
Consolidation Loan, you need to have at least one FFEL or FDL that has
been granted a deferment, default status or is presently in grace
period.
Any lender can consolidate your federal student loans. Most lenders,
however, can set a minimum balance -- like $5,000 or $7,500 -- on the
loans. As the terms of consolidation loans are varies you will need to
shop around for a lender that best suits your personal needs and offers
lower rate or better discounts.
Now that you have had a brief look at government debt consolidation
loans, why not consider one to consolidate all your federal student loan
debts? Many students and parents have successfully used the loans to
consolidate their federal education loans. So, if you have multiple
federal student debts you too can use the loan to get your expenses
under control and your life back on track.
Back to Government Grants Page
Government Debt Consolidation Loans to Debt Firms
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