Government Loan Consolidation Helps You With Debt

Besides private lenders, there is another good place to get a private consolidation loan. These loans are available for everyone, but it us usually students that see the most benefit.

In a nation swamped with debts, the federal government had thankfully stepped in to help people pay off their mounting debts. These loans are known as government loan consolidation programs, and they work in much the same way as private loan consolidation.

Like private consolidation loans, the government loans allow a debtor to collect all of their loans together and combine them into one single loan with only one low monthly payment. The biggest benefit is that there is only one interest rate for all of their debt and it is typically lower than the interest rate on unsecured loans.

Apart from higher interest rates, government consolidation also benefit from turning all their loans into a single manageable account; this means they only have to think about making one monthly payment instead of several monthly payments. This makes budgeting easier, if not a breeze.

Students, in particular, benefit from the different government loan consolidation programs available. With lower interest rates, they are able to quickly wipe out high-interest loans like credit card debts, student loans, as well as medical bills.

Under a Direct Consolidation Loan Program, for example, the United States Education Department pays off the outstanding amounts on a student debtor’s federal education loans. After that, he is granted a new loan, which represents the total amount of the old loans.

The Federal Family Education Loan program is another government loan consolidation program. With this program, the government extends a consolidation loan to pay off a debtor’s existing loans.

There are four types of government consolidation plans. There is the standard consolidation plan, the extended payment consolidation plan, the graduated payment consolidation plan and the income contingent repayment plan. Each of the plans is suited to suit the individual needs of debtors. The different types of plans refer to the payment terms on a government consolidation. Their payment terms can vary from ten to thirty years. The longer the payment term, the lower the monthly payment amount. Keep in mind, however, if you choose the longer payment period, the greater the amount you actually pay.

These government consolidation programs make it a lot easier for people to get rid of their mounting debt. For students getting a consolidation for student loan, this means the ease of one single monthly payment as long as the student has started working and is able to pay. This saves debtors from having to try to pay multiple creditors every month at differing interest rates. There is also no minimum amount that you must have in debt to be eligible for loan consolidation.

There are other factors that make government consolidation loan programs the best option. These loans to not cost a heavy fee to obtain. Payments can be made to be more flexible. The interest you will pay is the weighted average of your loans, rounded to the nearest one eighth of a percentage point. It does not even matter what the borrowers credit score is, they are still eligible for government debt consolidation.