Various government programs offer loans that are designed to help pay off multiple debts by combining them into a single payment. These types of loans are called government debt consolidation loans and employ many of the same principles of debt consolidation used in the private sector with some minor modifications.

There are some eligibility requirements and restrictions associated with most government debt consolidation loans. Each program awarding the government sponsored loan is unique and will vary from one type to the next. You will need to research the available options to find the one that works best for your specific situation.

The advantages of government debt consolidation loans are many. The interest rates are usually lower than those on the loans being consolidated, which can add up to huge savings over the life of the loan.

Consolidating multiple loans into a single payment also helps to reduce the amount paid out-of-pocket toward the debt each month. This makes is much easier to budget and reduces the financial strain that often accompanies multiple debts.

Students are among the most frequent recipients of government debt consolidation loans. Student loan debt, along with other types of debt including high-interest credit card debt and medical expenses are combined and paid off with the new government-backed loan.

For example, the Department of Education will pay off the original federal education loans with a new loan that can also include other debts. This is part of the Direct Consolidation Loan Program.

A similar government program, the Federal Family Education Loan Program, can also help to consolidate existing debts. There are a number of different programs available that may be able to help depending on your particular set of circumstances.

The majority of lenders working with these types of government programs provide a number of different options or plans. Each of these are designed to fit the specific needs and circumstances of the borrowers.

It is extremely important to do your research and to avoid jumping into an agreement with a company without verifying their credentials. Companies claiming to provide “free government grant money” often scam consumers with false promises and hidden “processing fees” and other unethical practices.

Government debt consolidation loans can be very beneficial in helping to relieve the financial hardship created by multiple debts. Find the right option that works best for you and your specific situation.

Author Alan Henderson is an independent writer interested in increasing financial literacy. Learn more about Government Debt Consolidation Loans Don’t reprint this exact article. Instead, reprint a free unique content version of this same article.