If you are burdened with multiple student loans, you can take the help of government debt consolidation loans to ease your burden.
Debt consolidation loans from government
If you have multiple student debts, it often causes you a lot of inconvenience to make payment to each creditor every month. Government debt consolidation loans can take away some of your troubles. These loans are made available through different government programs so that you can repay your multiple student loans. Under this arrangement, you are required to make only one single payment every month instead of making separate monthly payments to each of your creditors. . In order to reduce the interest rate, debt consolidation converts unsecured debt into secured debt.
Various government programs
The government runs different types of programs that especially help the student community to consolidate their loans to reduce and eliminate their debt as quickly as possible. Students incur debts mostly because of student loans, credit card debt, and medical bills. The education department of the government usually settles the original federal education loans and arranges a fresh loan for the consolidated amount of the old loans. This is done under what is known as the Direct Consolidation Loan Program. They do not consolidate other debts.
Programs under Higher Education Act
There are two programs under the Higher Education Act, the Federal Family Education Loan Programs and the Direct Loan Program, which offers you the advantage of debt consolidation. Under such an arrangement, you are issued a fresh consolidation loan so that you can repay your existing student loans. In all probability, you took your existing loans from various sources having different terms, dates of repayment etc. Debt consolidation will consolidate all your loans into a single one requiring a single monthly payment at a reduced interest rate. The amount of monthly payment you are required to make is also smaller to your advantage. Better still, you now have a clear idea about your repayment terms, the interest rate charged, and the due date of payment. You are often allowed to extend your payback term so that repayment becomes easier for you with monthly payments getting smaller.
Four government plans
You can utilize four plans under the government debt consolidation loan program, namely standard plan, extended payment plan, graduated payment plan, and income contingent repayment plan. No matter which plan you need, each of them contains features that greatly help anyone having student debt problems. All these plans provide the flexibility that one expects from a good debt consolidation program.