| What is a government debt consolidation loan? | | | | pay off your multiple student loans by getting a new |
| This is a kind of are loan that is made available (usually | | | | loan. |
| through the Federal government) to pay off multiple | | | | What sorts of benefits does this give me? |
| loans that you may have. By borrowing a sum of | | | | Your loans may all have different terms and |
| money from the government, you can pay back | | | | repayment schedules; also, they may have been |
| multiple creditors. This allows you the relative luxury of | | | | issued by different lenders. By consolidating your debts, |
| having one single monthly payment compared to three | | | | this simplifies your loan repayment by paying back |
| or four (or more). Debt consolidation also helps you by | | | | several types of Federal education loans into one new |
| offering a lower the interest rate. This is done by | | | | loan. Also, the interest rate may be lower than on one |
| converting the debt from unsecured to secured, e.g., | | | | or more of the underlying loans. |
| using your home for collateral. | | | | Not only that: the amount you pay every month on a |
| What are my options for a government backed debt | | | | loan is often going to be lower and the amount of time |
| consolidation loan? | | | | to repay may be stretched out as well, compared to |
| The most readily available government loans are for | | | | the original loan. All in all, this means that you will have a |
| students. Many students (and also recent graduates) | | | | debt that is more manageable and make it more likely |
| have multiple student loans, credit card debt, and | | | | that you can pay it back in time. |
| medical bills. The US Department of Education offers | | | | How can I get a debt consolidation loan like this? |
| debt consolidation loans for the purpose of paying off | | | | To get a Direct Consolidation Loan, you have to |
| federal education loans. Then they will issue the | | | | already have at least one Direct Loan or Federal |
| student a new loan for the amount of the old loans. | | | | Family Education Loan (FFEL) Program loan. In addition, |
| What should I look for? | | | | that loan must be in a "grace period," or have been |
| The Higher Education Act (HEA) mandates a loan | | | | granted a deferment, or default status. If your loan |
| consolidation program under the Federal Family | | | | does not fit that profile, it can't be included in a Direct |
| Education Loan (FFEL) Programs and the Direct Loan | | | | Consolidation Loan. Contact Federal Student Aid at the |
| Program. This means that you have an opportunity to | | | | US Department of Education for more details. |