Federal student loans are the first choice for students that require financial assistance with their professional or college studies. These loans offer defer payments while the student would be able to graduate and take classes. The payment on these loans does not begin immediately and they are generally deferred by 6 months. These loans are the largest source of loans for students in the US today. They allow the students to get financial help they need with a simple repayment plan and lower interest rates. There is no requirement for any kind of collateral in order to get the loan. One of the biggest benefits of these loans is the in-school subsidy on the interest which means that the government would be paying the interest while the student is still studying. The government would also be paying the interest for 6 month after the completion of studies.
Types of Loans
If you have been considering applying for federal student loans then you must know that there are several different types of loans available. Perkins Loan is one of the options. With this loan, the selected school would get the funds which would then be transferred to the account of the student through credit. The Stafford Loan is a subsidized loan where the student would be able to select the bank that would lend the money. The lender would send the money to the school and the money would then be transferred to the account through credit for the student.
Federal student loans are not always available in the form of money that would come from a lender. Students can also apply for direct loans. With the direct loan, the government would be the direct lender for the loan money. These loans are normally provided to permanent residents and to citizens. Since there are quite a lot of options available today it would be necessary for the students to first get a basic understanding of federal loans and the process that has to be followed for each before applying for a particular loan.
• 100% education cost can be borrowed
• Several offer benefits to students that will reduce the rate of interest
• Students are not required to complete FAFSA
• The funds can be used for computer, books, boarding and tuition
• Low interest rates are available if the school certifies the enrolment and check is directly sent to school.
• The federal student loans will require a credit check before an approval is provided. The interest rate would be determined based on the credit check.
• The rate of interest is variable and it may increase over time during the loan term.
• The private loans do not always offer deferment options.