Types Of Federal Student Loans

Types Of Federal Student Loans

Types of​ Federal Student Loans
Students who look for financial aid during studies either go for federal student loans or​ private student loans .​
Federal student loans are offered by the​ US government,​ which can be availed directly through banks,​ student loan lenders,​ school,​ or​ from Federal Family Education Loan program otherwise known as​ FFELP .​
Federal loans are offered with very low interest rates,​ longer repayment periods,​ and various kinds of​ repayment options with easy credit requirements than the​ private loans .​
in​ case of​ federal subsidized student loan,​ the​ interest is​ paid by the​ government to​ the​ financial institution when the​ student has been studying and also during the​ grace period .​
a​ federal loan may not be enough to​ cover all the​ expenses of​ the​ student and in​ that case,​ the​ student might have to​ take a​ private student loan to​ supplement his needs .​
It has to​ be remembered that,​ certain fees are deducted from the​ federal student loan amount,​ which means the​ student will not get the​ full loan amount applied for and should only take the​ actual amount into account while preparing the​ budget.
There are different kinds of​ federal direct student loans from different institutions .​
Hence,​ it​ is​ advised to​ take the​ guidance of​ the​ parents or​ from other financial aiding sources to​ decide on​ the​ type of​ federal direct student loan to​ suit the​ student the​ best.
Perkins loan option:
This loan can be availed by needy undergraduates and graduates,​ which is​ availed by them at​ a​ fixed lower interest rate of​ five percent .​
the​ funds are dispersed by the​ school,​ making it​ very easier to​ get the​ amount as​ soon as​ the​ student gets enrolled,​ rather than waiting half time to​ be eligible in​ the​ case of​ other federal loans.
Stafford loan option:
It is​ the​ most common federal student loan,​ which can be applied for by anyone .​
They offer fixed interest rates and are in​ the​ form of​ subsidized federal student loans and unsubsidized federal student loans .​
When the​ student avails the​ subsidized federal student loan,​ the​ government pays the​ interest when the​ student is​ studying,​ but in​ the​ case of​ unsubsidized federal student loan,​ the​ student has to​ the​ pay the​ interest but can defer making any such payments until he completes his graduation.
PLUS loan option:
It is​ otherwise known as​ the​ parent loan for undergraduate students .​
It is​ given to​ the​ parents of​ undergraduate students who are dependent and have enrolled at​ least half time .​
This loan option requires the​ applicant to​ be free from any adverse credit experiences like the​ bankruptcy,​ default etc on​ their credit record .​
These loans are offered at​ a​ fixed interest rate that is​ higher than the​ Stafford loan rate and also the​ repayment starts when the​ student is​ studying in​ the​ school.
to​ get a​ federal student loan,​ the​ student should complete the​ FAFSA (free application for federal student aid) and submit the​ same .​

Tips to​ make the​ process easier:
Before filling up the​ FAFSA form,​ the​ student has to​ be very organized and should have gathered all the​ necessary information to​ fill the​ form .​
It is​ very important to​ apply much earlier than the​ closing date for the​ application,​ to​ avoid any last minute trouble or​ avalanche .​
While filling up the​ form,​ one needs to​ be very patient and should allocate enough time .​
It takes an​ hour to​ complete the​ application normally.

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