During global economy crisis, there are more than 50% citizens in United States are knee-deep in debt. As a result, US government has taken hard effort to assist their citizens to overcome their financial issues. Currently, there are a number of government backed debt consolidation loans available to the public.
With the help of a new consolidation loan from government, you can consolidate Stafford loans, Plus loans, Perkins loans, etc into a new single loan. The mechanism of these loans is quite the same like other private debt consolidation instruments in the market. The only difference is these loans are fully governed by the federal government. At the moment, the federal government programs cover education loans, credit cards and medical expenses.
Many people are not aware about loans provided by the government. Now, let’s take a closer look at some of the important facts.
The government loans are offered by the Federal Government in United States for their citizens to pay off multiple loans that they may have especially during financial crisis. The citizens are allowed to borrow a sum of money from the government at a much lower interest rate to pay their creditors. This can be done by converting their current debt from an unsecured loan to a secured loan with collateral.
Nowadays, the most popular form of government loans are student debt consolidation loans. These loans are provided to assist college students and university graduates to solve their debt issues during economy downturn.
The US Department of Education offers these loans with the main purpose of assisting the citizens to pay off their previous federal education loans. Under The Higher Education Act (HEA), two loan consolidation programs, i.e. the Federal Family Education Loan (FFEL) Programs and the Direct Loan Program are offered to provide financial assistance to those people who are in need.
For those students who sign up for a direct loan consolidation program, they will get a new loan for the amount of their old loans. They use the new loan to pay off all their previous debts. Then they focus on making one repayment monthly for the new loan. This government loan is ideal for the borrowers who are looking for an economic hardship deferment, especially for those who are still unemployed.
However, under the Federal Family Education Loan Program, the borrowers are provided with a new consolidation loan which can be used to pay off any of their loans. The borrowers are not bound to use the loans to pay just for their educational loans.
Under the government backed debt consolidation loan packages, the borrower will be enjoying a reduced interest rate with the extended time to repay their debt if compared with the original loans. This will make the debt more manageable and under control. Besides, the citizens will be able to pay back their debts with less stress and burden.
Currently, there are many students and parents who have successfully used the loans to consolidate their federal education loans. If you have multiple federal student debts too, what are you waiting for? Act fast to get your finance back on track!None found.