Friday, August 19, 2011

All about Federal Student Loans



Students are the asset of any nation. Student Loans are of great help for students who are unable to afford their education. Federal Student Loans are a good way for students to provide financial assistance for their education. The Federal Student Loans are often considered to be secure and safe mode of financial aid. These federal loans have many benefits and it can be obtained at both undergraduate and graduate level. Many countries like Australia, USA, UK, India and some other countries provides the federal student loans as financial aid or welfare programs for students in schools or higher education.
            Federal Student Loans generally have low interest rates with many borrowing options and flexible loan repayment options which helps students looking for education funding. For most cases a federal student loan can be a very affordable method for higher education. There are websites like Federal Student Loan which lists all aspects of federal student loans and thus they are helpful for students to get all useful information they need on student loans or financial aid.

 There are two types of student loans which are federal loans or private student loans. Some of these loans are for parents of students for their financial need. Each of these types of loans is aimed for different people and depends upon various factors like the region or the courses taken. The types of federal student loans are –

– These loans are given by the federal government or some of the third-party educational organization. These loans are given on the financial requirements of the student and can be issued from a bank or a credit union or any government offices. They have excellent repayment options and thus the student can study at ease without worrying for financial problems. The Stafford Loans can be subsidized where you don't have to pay interest till the time you leave college/school or it can be unsubsidized where you have to pay interest for the loan amount from the time they are disbursed.

– These loans are given to the parents whose children are pursuing their educational courses in their respective school or colleges. The plus loan is given on the basis of credit history or rating and on the cost of attendance. The Federal plus Loan have a low interest rate and has easy repayment options and the repayment generally begins within 60 to 90 days after the disbursement of the loan.


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- These loans are generally awarded to the students with high financial need and also given to bright and meritorious students. These loans have very low interest rate with good and easy repayment options. A financial advisor can tell you whether you qualify for a federal Perkins loan or not so you can consult him for a federal Perkins Loan. But anyone should not default on the payments of the federal Perkins loan as it might damage his/her credit rating seriously. The Federal Perkins loan is determined by the factors such as the time of application, the level of the funding needed and the funding level of the school/college or university.

 The interest rate of the federal loans are lower compared to the private student loans are the interest rate is generally fixed. The interest rates of the different type of federal loans like the Stafford loan or the Perkins loan are different. As for example the interest rate of the Federal Perkins Loan is lower than other loan types but it is difficult to obtain. They have many benefits like easy repayment options and longer repayment holiday and payment in installments which can be subsidized or unsubsidized.

The Federal Student loans have many benefits over private or other loans. The federal loans can be consolidated with other loan types to have a single loan which would have a single interest rate and the student will have to repay the single consolidated loan. It reduces the hassle of managing different loans and to pay for the different type of loans. The federal loan consolidation is very helpful for students and parents with many loans. Some benefits and advantages of federal student loans are been given below.
They have low and fixed interest rates.
They can be deferred in some cases and can also be forgiven under certain specified circumstances.
They have free insurance schemes.
They have easy monthly repayment options and also have unsubsidized or subsidized schemes.
They do not charge extra for pre payment with easy repayment options.
They allow for debt forgiveness under certain terms.

 The student loans can be covered with the help of financial aids like grants, scholarships, personal savings etc. Legal or Medical professionals can have their student loan forgiven to a range of 1, 00,000 dollars depending upon the situation and the loan amount if they agree to work full time or part time or practice under certain jurisdictions. Some lawyers can have their student loan forgiven if he/she agrees to work in some specified non-profit organization, government organization or in public sector. A financial loan advisor may be able to tell you whether you qualify for a loan forgiveness program. Thus these student loan forgiveness programs are a boon for people who have the required education but due to financial crisis are not able to repay the loan.

 The loan consolidation program was started in 1986. The borrower can choose to consolidate Federal plus Loan, Federal Perkins loan and Federal Stafford Loans into a single loan which has a fixed interest rate and repayment term. This type of student loan consolidation has longer repayment term which ranges from 10 to 30 years. The total amount paid in loan consolidation is higher than other loans but the monthly repayment is low.
            However there are some demerits of student loan consolidation as some of the benefits of the original loan consolidated are not carried over to the consolidated loan. For federal student loan consolidation there is no credit check for credit rating. Thus the loan consolidation makes it quite easy to manage many loans and remove hassles of repayment of each individual loan in a timely manner.


The first step of applying for a federal student loan is to fill out the FAFSA form and then submit it to the student loan bank or to the college/university as may be required. You also have to qualify certain eligibility factors for applying for a student loan like being a resident of the nation, be enrolled in certain courses/programs, have a good credit rating, maintain a satisfactory result, to have a cosigner etc. The Federal student loans are often easy to obtain as there are simple steps of obtaining the loan. There are still some other criteria for taking a student loan which you can check on the respective websites which gives you a detailed process of application of loan and tell you all about student loans.

 We find the federal student loans are a boon for students for providing financial assistance for higher education. You should research on various loan types and consider the benefits of each and then take the student loan. You should also consider factors like interest rate, loan consolidation and loan repayment options before applying for a loan. So a federal loan is one of the better ways to go for higher education for a financial aid.
            If you have any problems or doubt or queries regarding federal student loans, loan consolidation, loan forgiveness, interest rate, loan repayment, grants or services you can contact me.


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