If you are one of the many people now that is suffering from multiple debts then do not despair because there is a solution for it. The words “debt consolidation” does not sound new to most people nowadays. It seems like anywhere you turn or look you can find an ad, reminder, or suggestion about this topic yet there are still many people out there who have no idea what it is all about.
Debt consolidation means you are unifying (consolidating) all your different loans and debts into one making payment easier. Why would you consider this option? It is simple. Debt consolidation not only gives you the convenience of paying only one debt but when you apply for one and it gets approved you will be able to attain a lower interest rate too.
One reason why so many people have too much credit is because of student debts. We invest in education and many borrow whatever they could to help them get their degrees. Last January 17, 2012 though the U.S. Department of Education offered a short-term initiative that intends to help people simplify their education loan payments by ensuring all of the eligible federal education loans will have customer service provided by only one company.
This is called Special Direct Consolidation Loan and the companies that handle them are called servicers. If you wish to apply for this particular program, Special Direct Consolidation Loan, you need to have one student loan that is not 270 days or more past due, with the Department of Education.
You must also have one federal student loan borrowed from a bank or another lender instead of the federal government. This type of loan is called a Federal Family Education Loan or just FFEL. Only loans that are not 270 days past due qualify to be consolidated.
If you opt to take this direct consolidation loan you immediately reduce the interest rates by up to .25%
and another .25% interest rate reduction if you sign-up for automatic payments.
Now you will also have the convenience of having one loan servicer for all of your eligible federal loans.
Keep in mind that once your loans are combined it cannot be undone since the old loans are paid off and no longer exists. You need to apply with the Department of Education to see if you will be qualified. Apply for this one as soon as possible as this program is only until the 30th of June, 2012.
For further reading on debt consolidation information click HERE
Economic Stimulus information