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Federal Student Loan

Students are big assets of any nation. Student Loans are a great help for students who can’t afford their education. Federal Student Loans are a great way for a student to provide funding for his/her college or higher education. The Federal Student Loans are considered to be the most secure and the safest mode of financial aid. These loans which are provided as a federal student aid have many benefits and can be obtained at both undergraduate and graduate level. Many countries like USA, UK, Australia, India and some other countries provide federal student loans as a welfare program as a financial aid for students for school or higher education.

Most federal student loans have very low interest rates with various borrowing options and very flexible repayment options helping students/graduates looking for funding. In most cases getting a federal student loan can be the most affordable way for higher education. This website lists all aspects of federal student loan which are very helpful for students looking for ways to finance their educational needs.

Types of Federal Student Loans

There are many types of student loans federal or private. Some of these are also available for parents. Each of these loans is aimed at different type of people which depend upon the courses taken, region etc. The different types of federal student loans are –

Federal Stafford Loans – The Stafford Loans are given by the federal government or the third party lending institutions. They can be issued from a bank, credit union or government offices which are given on actual financial requirements. These loans are flexible with excellent repayment options which make the students at ease and continue with education without worrying for financial aid. The federal Stafford loans can be subsidized in which you don’t have to pay interest till you leave school or unsubsidized where you have to pay the interest from the time they are disbursed to you.
Federal Plus Loans – The Plus Loan is available for parents whose children are pursuing their undergraduate/graduate courses. The Plus Loan is given on the basis of the cost of attendance and credit history/rating. The Federal Plus loan have low interest rate and the repayment generally begins within 60 to 90 days after the full disbursement of the loan.

Federal Perkins Loan – Federal Perkins Loan is awarded to students with high financial need and given to deserving meritorious students. The Federal Perkins Loan has very low interest rate with easy repayment options. You can ask a financial aid adviser whether you qualify for a Perkins Loan. However you should not default of Perkins loan as it might damage your credit rating seriously. The Federal Perkins Loan is determined on three factors which are the time when you apply, the level of need and the funding level of school/college.

Federal Student Loan Interest Rates and payments

The interest rates of federal student loans are quite low compared to private loans and are fixed. The interest rates differ for the different type of federal student loans like the Perkins loan or the Stafford loan. For example the interest rate of Federal Perkins Loan is quite low but is somewhat difficult to obtain. These loans have easy repayment options like longer repayment holiday and repayment in easy installments which can be either subsidized or unsubsidized.

Benefits of Federal Student Loan

The Federal Student Loans have many advantages over normal or private loans. The added benefit is that these loans can be consolidated with other loan types to have a single loan with a single interest rate without the hassle of managing various loans and payments for each of them. Federal Student Loan consolidation is extremely helpful to students and parents with many loans. Some of their other advantages are listed below.

  • Federal Student Loans have low interest rates and fixed interest rates.
  • These student loans can be deferred in some cases and also forgiven under certain circumstances or conditions predefined.
  • These Federal loans have easy monthly payment options and also subsidized schemes where you pay only after completing the course.
  • These Student Loans have free insurance schemes.
  • They also allow for debt forgiveness under certain conditions.
  • They don’t charge extra for pre-payment and have easy repayment options.

Federal Student Loan Consolidation

The federal student loan consolidation program was started in the year 1986. In this program students/debtors can choose to consolidate Federal Stafford Loans, Federal Perkins Loan and Federal plus Loan into a single loan with a specific fixed interest rate and repayment term. Federal Student loan consolidation has longer terms than other types of student loans which can range from 10 to 30 years. In a federal loan consolidation you have to pay lower monthly repayment but the total amount repaid would be higher than other loans. The fixed rate of interest in a federal student loan consolidation is calculated by taking the weighted average of the interest rates of the loans being consolidated.

However loan consolidated is not suited for some people as some of the feature/benefits of the original loans being consolidated like post graduation grace period, federal student loan forgiveness are not carried into the consolidated loan. There is no fee on Federal Student Loan consolidation and there is no credit check for credit rating. Federal student loan consolidation is quite helpful to individuals who have many loans and it helps them to avoid managing various loans and payment of each of them. So it is better to have all loans consolidated into a single loan which makes it easier to manage for the borrower.

Federal Student Loan Forgiveness

Federal Student Loan can be covered with the help of free financial aids like scholarships, grants, personal savings etc. Student loan forgiveness can eliminate a thousand dollars to $1, 00,000 worth of student loan depending upon the loan amount and situation. Legal and Medical professionals can have some of their student loan forgiven if they work full or part time under practice or certain specified jurisdictions. Even lawyers can have part of their loan forgiven if he/she agrees to serve in the public sector or for non-profit organizations. Also people who work as social workers and serve through Americorps, PeaceCorps or the VISTA program also enjoy the student loan forgiveness programs. Thus Student Loan forgiveness is often a boon for the borrower who might be on a financial crisis. You can also consult a student loan adviser to clarify if you qualify for some student loan forgiveness program.

How to apply for Federal Student Loan

To apply for a Federal Student Loan you must fill in the FAFSA form first and submit it to your federal student aid organization or to the college as required. You also need to be eligible for the federal student loan satisfying certain conditions like being a permanent resident of the nation, having a good credit rating, being enrolled in certain programs, maintaining satisfactory results in school, having a cosigner in certain cases, etc. Federal Student Loans are easy to obtain and require filling up a form stating financial need to meet college/university expenses. There are also other criteria or requirements to qualify for federal loan forgiveness program which you can check on the respective website. The respective websites on the different types of federal student loans give you a detailed process of application for the federal student aid.

Summary and Conclusion

As we find that Federal Student Loans are a great way to obtain funding for higher education. Students should research about different types of federal student loans and apply for the one that suits them the best with respect to interest rates, loan consolidation or student loan repayment options. Thus a federal student loan is one of the best ways to go for higher education when one cannot afford the expenses of higher education.

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