Government Debt Consolidation Loans

Government Debt Consolidation Loans

Loan is one type of liability. A person takes loans for various reasons like- education, marriage, business, purchase of house, and vehicles etc. A debtor may be able to decrease the debt burden by choosing debt consolidation loan. In debt consolidation you can join the different unsecured loans into one single loan. Such kinds of loans are provided by government is called Government Debt Consolidation Loans.

Mostly government debt consolidation loans are available for student’s loan. These loans are not available for credit card or mortgage debt. Student loans are recognized as direct loans. Student loans are obtained from the Federal government. The other lender contributes in Federal Family Education Loan (FFEL) program. Direct and FFEL parents PLUS loans are presented to parents who are eager to fund their child's education.

Advantages of debt consolidation:

• The debt consolidation simplifies the process of repaying. It gives you the clearer picture of the amount that is to be pain at certain period of time.
• The rate of interest is lower on the consolidation loan. The monthly amount of debtors will be less.
• Your repayment of individual loans will be handled by the company before consolidation. You will not have any need to worry about dealing with them with the repayment of the loans.

Drawbacks of debt consolidation:

• If you fail to repay the secured loan in time then you will stand to lose the security
• You can get the more manageable debt but the debt does not get cleared
• In case of the secured loan the time period to clear the debts would be much longer
• If the individual loans were paid of individually then the total amount to be paid will be higher

Various programs of government:

Government provides various programs for the consolidation loans. This program will help the student community to consolidate their loans to reduce and eliminate their debt. Because of student loans, credit card debt, and medical bills students debts incurred. Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) both are government programs. Thses programs will help the homeowners to make mortgage payments. Government does not provide debt consolidation loans to homeowners.

Government Debt Consolidation Loans for Students:

Generally government debt consolidation loans are for student loans. Students may be able to get consolidation loans into one payment. The process dose not decrease debt, but make one loan from many loans. You have to pay one loan rather than several. The Federal Family Education Loan is one of the government loan. This loan also offers consolidation. Another option of government consolidation loan is Federal Direct Loans. For more information of Federal Direct Loans, click here. For more information of Federal Family Education Loan you can click here.

Other government helps for consolidation:

There are other government programs for consolidation debt. These programs are for that who have equity in their home may be able to refinance their home and use the equity to pay down debt. This process is not good for the person who wants to make his/her new mortgage. The option is given below:

FHA debt consolidation loan:

The FHA is the section of U.S. Department of Housing and Urban Development. The loan of FHA gives you at low qualifications and low interest. Because of this consolidation debt loan, you may be able to refinance your existing mortgage and remove the equity from your home to pay off your debt.

VA debt consolidation loan:

This VA also gives you the same program like FHA. The persons who are served in Armed forces can take this program. You may be able to refinance your loan into a VA loan if your home has equity in it.

The different plans for repaying your government debt consolidation loan are given below:

Consolidation standard repayment plan:

In this plan you will have to pay monthly payments of $50. In the time of 10 to 30 years you will have to repay the whole government consolidation student loan.

Consolidated graduated repayment plan:

According to this plan, your monthly payments will be least at first, but after two years it will increase. In 10 -30 years period your consolidated government debt consolidation loan will have to be repaid in full.

Extended fixed repayment loan:

Under this plan, your minimum monthly payment will be $50 which will be fixed throughout the repayment period. You will have to repay your government loan within 25 years.

Extended graduated repayment plan:

If you choose this plan then you will have to pay at least $50 monthly or you have to pay the equal amount of your monthly interest which will increases after every two years. Your total amount of government debt consolidation loan should be at least $30,000.