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What is a government debt consolidation loan? This is a kind of are loan that is made available (usually through the Federal government) to pay off multiple loans that you may have. By borrowing a sum of money from the government, you can pay back multiple creditors. This allows you the relative luxury of having one single monthly payment compared to three or four (or more). Debt consolidation also helps you by offering a lower the interest rate. This is done by converting the debt from unsecured to secured, e.g., using your home for collateral.
What are my options for a government backed debt consolidation loan? The most readily available government backed debt consolidation loans are for students. Many students (and also recent graduates) have multiple student loans, credit card debt, and medical bills. The US Department of Education offers debt consolidation loans for the purpose of paying off federal education loans. Then they will issue the student a new loan for the consolidated amount of the old loans. What should I look for? The Higher Education Act (HEA) mandates a loan consolidation program under the Federal Family Education Loan (FFEL) Programs and the Direct Loan Program. This means that you have an opportunity to pay off your multiple student loans by getting a new consolidation loan. What sorts of benefits does this give me? Your loans may all have different terms and repayment schedules; also, they may have been issued by different lenders. By consolidating your debts, this simplifies your loan repayment by paying back several types of Federal education loans into one new loan. Also, the interest rate may be lower than on one or more of the underlying loans. Not only that: the amount you pay every month on a consolidation loan is often going to be lower and the amount of time to repay may be stretched out as well, compared to the original loan. All in all, this means that you will have a debt that is more manageable and make it more likely that you can pay it back in time. How can I get a debt consolidation loan like this? To get a Direct Consolidation Loan, you have to already have at least one Direct Loan or Federal Family Education Loan (FFEL) Program loan. In addition, that loan must be in a "grace period," or have been granted a deferment, or default status. If your loan does not fit that profile, it can't be included in a Direct Consolidation Loan. Contact Federal Student Aid at the US Department of Education for more details. For more info on credit card debt consolidation calculators, visit Ara Rubyan's Your Debt Consolidation Resource. Ara Rubyan is not a part of the banking or credit card industry, nor does he sell financial services. He is not a guru of any kind. Instead, he is like you: a consumer or business owner who has tried to find the best way to do debt consolidation and take control of his personal finances. Now, he's put all his research (so far) in one convenient location and he's sharing it with you, no strings attached. Visit his website; there, you'll find: - Plenty more articles on debt consolidation;
- Videos;
- An interactive poll;
- The latest news on the debt consolidation business;
- Space for your questions, answers and suggestions.
So go on over to Your Debt Consolidation Resource and have a look. |
