| The federal government offers various loans to the | | | | repayment options offered before selecting a debt |
| citizens of the United States to sustain the rising | | | | consolidation company. Most financial companies |
| costs of education and living. Although, there are a | | | | provide various incentives to encourage borrowers to |
| large number of lending institutions and financial | | | | make timely payments. This form of arrangement is |
| companies operating in the financial market, the | | | | highly beneficial for both the parties, as the lender is |
| federal government continues to remain the primary | | | | assured of regular payments and the borrowers get |
| source of acquiring loans. There are a variety of | | | | discounts on their loans. Apart from providing loans, |
| student loans backed by the federal government and | | | | these companies also provide other consolidating |
| the most popular loans include Stafford loans, Plus | | | | services such as credit counseling, debt management |
| loans, and Perkins loans. Stafford loans are offered to | | | | and guidance to select a loan consolidating plan. |
| both undergraduates as well as graduate students to | | | | These loan consolidation plans are devised after a |
| facilitate them to enroll themselves in universities and | | | | careful analysis of a borrower's paying capacity, the |
| colleges. Many non-students face the difficulty of | | | | loan amount and the borrower's credit report. |
| repaying loans on time, as they may also have to | | | | It is crucial for borrowers to verify the credibility of |
| repay other loans in addition to the education loans. | | | | the consolidating company for which they can consult |
| They turn to debt consolidation loans as a way out | | | | the Better Business Bureau. Many fraudulent |
| of their immediate woes. | | | | companies lure borrowers by promising to provide |
| Typically, a credit check is essential for non-students | | | | consolidating services even for a poor credit history. |
| to qualify for a debt consolidation program. However, | | | | They may charge upfront fees for the services and |
| a credit check is not required for non-students | | | | simply abscond with the money. |
| applying through a secondary lender. There are no | | | | Some lenders offer principal reduction incentives as a |
| fees charged to non-students for applying for loan | | | | part of their federal loan consolidation plan. Typically, |
| consolidation. Non-students have the option of | | | | this reduction is applied to the principal leading to |
| consolidating their loans under the federal programs | | | | reduction in the loan balance. As a rule, all lending |
| such as Federal Family Education Loan Program | | | | institutions have certain parameters to determine the |
| (FFEL) and the Federal Direct Loan Program or | | | | eligibility of the borrowers for principal reduction. The |
| through private lenders. The non-students have to | | | | most common eligibility criteria are the stipulated |
| meet the eligibility criteria laid by the respective | | | | number of on-time payments. Principal reductions do |
| consolidating companies to qualify for debt | | | | not affect the interest rate in any way. |
| consolidation. The private lending institutions may | | | | Federal loans offer amazing benefits such as |
| have less rigid eligibility criteria but have higher rates. | | | | tax-deductible interests and deferment, which are |
| As a result, many non-students opt for the FFEL and | | | | continued even after loan consolidation. As a result, |
| direct loan programs for the countless privileges they | | | | financial consultants stress the importance of |
| offer. | | | | consolidating federal and private loans separately to |
| Many financial consultants stress on the importance | | | | avail the federal benefits. |
| of considering various factors such as incentives and | | | | |