Government Debt Consolidation, Some Facts That Can Help You

Government debt consolidation, here are some facts that can help you with it. There seems to be a lot of talk about government bailouts today. Every time you hear the financial news it seems that some company or group of companies are asking the government for help to get them out of a financial mess. But what about the working people? Is there any government bailout programs out there to help the average working person when they run into financial problems? Do government debt consolidation programs exist?

Generally, there simply are not many government programs to help the average worker who is having problems with their debt. When speaking of debt consolidation programs, many people immediately think of loans that are arranged as a means to bring several outstanding loan balances together into a single debt. While such consolidation loans may be available, other repayment programs work by an agency or intermediary acting on behalf of the borrower to negotiate more favorable loan terms with their lenders. Most of the time the government does not directly sponsor these. There is one area, however, where government debt consolidation programs may be able to help and that is student loans.

In the United States, federal student loans are guaranteed by the U.S. government, and therefore are treated differently than other sorts of consumer loans. If you’re looking for government debt consolidation of your federally guaranteed student loans, you can look into one of the many student loan consolidation programs available. Under such plans, your existing student loans may be purchased and closed by a special student loan consolidator, or by the U.S. Department of Education.

Before you think about a government debt consolidation agreement, make sure you understand that student loan consolidation should not require the payment of any fees by the borrower. This is different than private lending arrangements where the borrower is usually required to pay fees at the time of the loan’s closing. In the case of private lending, whether it be unsecured or secured using a tangible asset such as your home as collateral, there are almost always fees that must be paid at the time the loan is assigned. In some cases, these fees will be rolled into the new loan agreement and won’t require out of pocket payment. In the case of government debt consolidation of student loans, no such fees are required nor would they be rolled into the new consolidated loan.

Government debt consolidation of student loans is beneficial to the borrower by helping to protect their credit rating. But, it should be noted that not all federal student loan holders report their account to all the credit bureaus, so there may be no material impact on the borrower’s report or credit score.

So if you happen to be carrying a number of student loans and you’re looking to the government to help, make sure you investigate the possibility of government debt consolidation through a student loan-refinancing program. In the long run you may find that turning to the provisions provided by the federal student loan program may work in your favor.

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