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Federal Government Helps with Debt Consolidation Loans

The federal government can back a debt consolidation loan for certain individuals. These loans offer less than market interest rates allowing individuals to catch up on debt problems.

It may seem unbelievable that the federal government has installed a debt consolidation program to assist students after they have completed their studies. This debt consolidation has its advantages over private consolidation loans, but there are points to consider before making knowledgeable decisions regarding a government debt consolidation program.

Debt Consolidation Benefits

Many students leave academia with a considerable debt burden. The burden may consist of credit card debt, student loans, personal loans, and obligations to financial instruments they used while attending school. All this debt to all those lenders can become a budgetary nightmare. With a debt consolidation loan a financial life can become a lot easier. It will pay off all the various creditors, leaving the former student with one payment, to one creditor, in one amount, at one time of the month, at one interest rate, and often with a payment far less than the sum of the various debts. Managing a budget on those first paychecks should become a lot less difficult.

Government Debt Consolidation Details

The Federal Family Education Loans and other government direct loan programs have covered debt consolidation for students. These loans are labeled as secured. As such, these loans are available at interest rates much lower than found on the private lender market. Sometimes it can put a smudge on an individual's credit history. These loans will actually help former students regarding their credit reports. Be aware that not all consolidation programs have any intercourse with credit reporting agencies. This should be one of the first questions a prospective borrower should ask when approaching an agency.

Check Backgrounds and Credentials

As with any program involving finances, debt, and even the anxiety that can result concerning those issues, there are less than honest entities out there that offer consolidation loans. They may have the look and feel of a federally backed program, but they are anything but. Because people who are dealing with debt may be quite anxious, in their effort to fix their problem they are often blinded to reality. These businesses can cost in terms of higher interest rates and even not properly paying off creditors that is a paramount part of any debt consolidation program. Make sure the agency you are working with is indeed a part of the federal government program.

Government Debt Consolidation Loans Interest Rates

While drawing up the contracts, a fixed interest rate is imposed. If a former student or other candidate is combining loans of different types and rates, a weighted average calculation will be considered which is based on current interest rates and the various rates of the loans themselves.

Casting a Wide Net

Usually the amount of indebtedness should be over $10,000. And student debt is not the only debt that can be rolled into a federal debt consolidation loan. Federal government debt consolidation programs work by taking the total sum of all your credit cards, medical bills, student loans, automotive loans, and other debtsScience Articles, and paying them off in full. Many websites exist which can guide the prospective borrower through the application process and helping you understand the financial terms and government regulations. You may even qualify for debt negotiation. That means that a credit counselor will approach your lenders and try to lower the overall amount of the loan before consolidation which will save you considerable money on down the line. Government debt consolidation loans have been the lifelines for many former students and other citizens.

Article Tags: Debt Consolidation Loans, Government Debt Consolidation, Federal Government, Debt Consolidation, Consolidation Loans, Government Debt, These Loans, Interest Rates

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Amanda Hash is a Guaranteed Bad Credit Personal Loans Consultant with more than twenty years of experience. For more information about Military Loans Fast, Credit Cards, Unsecured Loans, Fresh Start Loans, Debt Consolidation, Student Loans and others please visit

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