For a country that is a nation of debts, the federal government thankfully has programs that help people pay off their myriad of loans. These loans are invariably known as government loan consolidation programs and they operate in the way that private loan consolidations do.

Government loan consolidations allow the average debtor to round up all their existing debts and lump them into a single loan. Borrowers of government consolidation loans benefit from their lower interest rates, as against having to pay unsecured loans with higher interest rates.

Apart from higher interest rates, government consolidation also benefit from turning all their loans into a single manageable account; this means they only have to think about making one monthly payment instead of several monthly payments. This makes budgeting easier, if not a breeze.

These loans are particularly helpful for students, who can obtain them to help with medical bills and high interest loans like student loans and credit card debts accrued while they were in school.

With a Direct Consolidation Loan, the United States Department of Education pays off the balance of all of the federal student loans a scholar received while in college. The student is then granted a new loan, which is equal to the balance of the other loans combined.

A similar program is the Federal Family Education Loan, where the government again extends a loan to help consolidate the loans a student has built up over time.

Overall, there are four types of government consolidation programs. There is the standard consolidation plan, the graduated payment plan, the extended payment plan, and the income contingent plan. Each plan is set up to fit the individual needs of the borrower. The different types of plans refer to the payment terms of the consolidated loan being offered. The payment terms on these loans range from ten to thirty years. While payment amounts are lower on longer payoff loans, the amount paid in total will be much higher because of interest.

These government consolidation programs make it a lot easier for people to get rid of their mounting debt. For students getting a consolidation for student loan, this means the ease of one single monthly payment as long as the student has started working and is able to pay. This saves debtors from having to try to pay multiple creditors every month at differing interest rates. There is also no minimum amount that you must have in debt to be eligible for loan consolidation.

There are other advantages that tip the balance in favor of government consolidation. This loan does not require a hefty processing fee. Payments too can be made in flexible terms. The interest rate for a government consolidation is the weighted average of the interest rate of your loans, which is rounded off to the nearest 1/8 percent. It does not matter if a student has a bad credit history - her or she would still be eligible for a government loan consolidation.