What is a government debt consolidation loan? Basically, this is the kind of consolidation loan that is made available through the federal government and is designed to help you pay off all the various loans that you currently have. Through the borrowed money that you’ll be getting on loan from the government, you can then pay back your creditors for the multiple loans that you owe them. Now, instead of having to pay several loans each and every month, you only need to worry about making a single payment to the government.
Another great thing about this is the fact that consolidating your debts can actually provide you with a much lower interest rate. This could be done through converting your debt from an unsecured loan to a secured loan. For example, once you convert your debt to a secured loan, you can use your home or your car for collateral and this would give your creditors some kind of security thus making them lower the interest rate on your loan.
So, what are the options for a government backed debt consolidation loan that are available to you? One of the most readily available government loans is actually available to students. Many students, mostly college students as well as recent graduates, actually have a number of student loans, medical bills and credit card debt on their plates. This is why the US Department of Education has designed these consolidation loans to help assist them in paying these debts and loans off. After all, everyone could use a little help from time to time especially when it comes to one’s finances.
So if you’re a student and you’re looking for a way to ease the burden of paying off your outstanding loans then this could be the solution that you’re looking for. What should you look for? Well, the Higher Education Act or HEA actually mandates a consolidation program that is under the Federal Family Education Loan or FFEL Programs as well as the Direct Loan Program. Basically this means that you would have a chance to pay off your various student loans through procuring a new loan.
What benefits can you expect if you do decide to get a government debt consolidation loan? Well, through consolidating your loans, you can make your repayment much easier because you only need to pay for one loan and not several. It’s also easier in terms of coming up with the money to pay for it because you only need to worry about one interest rate.
You can also extend the life of you loan thus making your monthly payments smaller and easier on the pockets. This is great for fresh graduates who just got out of school. They don’t have to worry about not being able to pay off their loans because they haven’t found a job yet. So think about it, do the necessary research. You can also talk to an expert on the subject to find out more about it and if a government debt consolidation loan is the right choice for you.