Government Assisted Consolidation Loans

For most loans the government recommends seeking credit counseling for American citizens having financial problems. However, for those with federal education loans there are government assisted consolidation loans.

If you have multiple federal student loans you can get a consolidation loan from the government, combining your multiple loans into one. These government assisted loans are typically financed by the Department of Education and are called Direct Loans.

When you have these types of loans to repay you have a lot more options than you would in any other program with any other lender. These consolidation loans offer lower interest rates than private loan companies, no fees for consolidation, there is the option for deferring the loan for three years and having a six month grace period before beginning payments after graduation. Also, depending on the amount of the debt, you have 12-30 years for repayment. These direct loans are flexible, with multiple plans for the borrower to choose from. They take into consideration your income, family size, loan amount, and changing needs as your post student life progresses which really makes the government assisted consolidation loans work with your life instead of being the huge burden private loans easily become.

If you don't consolidate until after July 2009 then one of the new options is built so that after 25 years if the debt has not been paid in full it will be forgiven and you don't have to worry about it any further. Of course this doesn't mean you can just ignore payments. The deal is that they will work with your situation so that you make the payments you can afford, as I mentioned above, and if after 25 years of making affordable payments you still have not fullfilled the total amount, it is forgiven and you do not have to make any more payments. This is particularly helpful for those in social service jobs.

There is only one real negative component to this option compared to a private, or traditional, offer. While most private consolidation loans will allow you to pay off all debts, bills, and credits cards, the government assisted consolidation loan is only for combining federal education loans. Of course, this offer has such a low interest rate, and so many flexible options, it is still worth it to use this for your federal student debt, and look into other options for your other debts.

With more flexibility than any other option, and lower interest rates, the government assisted consolidation loans can help students pay off their debts, and live their lives without debt ruling them.