Difficult economic times have hit everyone including student loan borrowers. Students who have been forced to quit school before completing their degrees and graduating scholars are finding it difficult to locate good paying jobs—some are unable to find any type of work whatsoever. Additionally, companies have been laying off employees in the hopes of surviving a brutal economy. Because they have been laid off or are having difficulties locating jobs, individuals are finding themselves unable to repay loans. If you have student loan debt, you may find welcomed relief in student loan debt consolidation programs offered by the government.
Debt Consolidation Programs offered by the US Department of Education
Two debt consolidation programs offered by the US government are the Family Education Loan Program and the William D. Ford Direct Loan Program. These student loan debt consolidation programs offer you an opportunity to combine multiple student loans, extend repayment periods, lock in interest rates and reduce monthly payments; hence you are able to prevent defaults and avoid financial ruin. Through the consolidation programs, you may consolidate multiple student loans into one loan and extend your payment period between 10 and 25 years, depending on the option you selected.
Loan Consolidation Program Description
Funding for the Family Education Loan (FFEL) Program is provided by private lenders and the loan is guaranteed by the government. A guarantee by the government means that should you default on the loan, the federal government would repay the private lender. You would then be required to repay the government. Conversely, if you are participating in the William D. Ford Direct Loan Program you receive funding from the federal government. Interest rates on FFELs are 6% for undergraduate students and 6.8% for graduate students while interest rates on Direct Loans are 5%. In both programs, either you or your parents are eligible for these loans.
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