Government assisted consolidation loans are available only to assist borrowers combine their Federal education loans. These loans are called Direct Consolidation loans and are financed by the U.S. Department of Education.
They act like other consolidated loans in that you end up with one lender who is the government, one loan and one monthly repayment making it easier to manage.
Advantages of government-assisted consolidation loans include:
The interest on these loans is usually low. These loans are generally easier to get too and hence make your debts easy to manage and reduce also. You can decide on taking the loan early to lock in record low interest rates.
You have four plans to choose from regarding how to repay the loan and the terms are flexible. These plans take into consideration the income of the borrower and even his changing needs. Your monthly repayments will take into consideration your income, family size and loan amount.
You don't have to pay any admin or service fee for the consolidation. You don't have to worry about minimum payment requirements either. At the same time you can put off your payment for up to 3 years and have a grace period of six months before you begin with your repayments. Depending on your debt amount you have to repay your loan for a period of 12-30 years.
As mentioned earlier, you must have outstanding federal student loans. Then you must qualify based on your need which is evaluated on the basis of your income, family size and the total outstanding balance of your federal student loans.
The following are the benefits of government assisted consolidation loans:
- you can put off payments up to 3 years
- for the first six months it's all right for you not to pay
