Digital News Report – The amount of money in outstanding student loans now exceeds credit card debt. Many current and former students may have multiple loans that must be paid.
The problem has become so immense that the government has taken notice and provided a solution. “These programs simplify loan repayment by combining several types of Federal education loans… into one new loan”, the Federal Student Aid department said in a statement.
The goal is to lower payments into one single manageable payment. The government has a name for this type of loan: A Direct Consolidation Loan. “There is no minimum amount required to qualify for a Direct Consolidation Loan,” the government said in a statement. “In addition, consolidation is free.”
The second largest higher-education loan program was the Federal Family Education Loan (FFEL) Program. The program, while in existence, helped over 60 million American receive a higher education.
The consolidation loan program is designed to help borrowers using the direct loan program and the FFEL program.
Private consolidation loans may also be available. Like any other private debt consolidation loan, the interest rate may depend on the loan amount and the credit history of the borrower.
Both Citibank and Bank of America offer debt consolidation loans. These loans may be secured or unsecured. Depending on the credit record, the loans could be as low as 5.76%.
By: Tina Brown