Federal Student Loans

Going to college is a common goal set in the mind of almost every student after high school. However, financial problems often set them back. For such cases, the government offers options in aiding these needs. Federal student loans are made available for students who want to continue on with college but who do not have the resources to do so.

Federal student loans are not difficult to acquire but there are certain qualifications for applicants to avail of. One must be enrolled in college (at least part time) and maintain a recommended grade point average or GPA. Low interest student loans benefit students well and have both advantages and disadvantages.

An advantage of availing low interest Federal student loans is that the government pays for the loan interest while the student is still in college. Also, it requires low payments and a shorter repayment period. Two of the most common and helpful low interest loans for students are the Stafford and Pelkins student Loan.

The Stafford student loan allows students with very little or no credit at all to afford going to college. These loans are based on income and not on credit. The government pays for the loan interest while the student is still in college, under the subsidized Stafford student loan. On the other hand, the student has the choice to pay for the interest or defer the loan. An interest of 5.6% is charged for subsidized loans while 6.8% is charged for unsubsidized ones.

Similar to the Stafford is the Pelkins student loan. This type of loan is also subsidized and allows the student to begin paying nine months after graduation. This among all types of student loans provides the longest grace period and is therefore known as the “exceptional need” based loan.

An application begins by filling out the FAFSA or the Free Application for Student Aid. This provides the FAFSA Center with all the important information about the applicant enabling them to determine how much you will need to pay for you college tuition fees.

Upon submission and processing (usually takes 3 to 5 working days) of the FAFSA to the Department of Education, the applicant’s college shall receive a copy of both his/her Student Aid Report (SAR) and the Expected Family Contribution (EFC). The college will then award the successful applicant with the amount needed to pay for his/her fees. In turn, the applicant must sign necessary documents agreeing to the terms of payment and accepting the amount awarded by the college for the said academic year.

Upon acceptance of the financial aid, it is ideal for a student to consolidate Federal student loans. This way, all the student’s loans availed in college are combined into one monthly payment and is more likely to have lower interest payments. There are several different payment plans which the student may choose from in order to conveniently pay for the monthly fees. Some of these plans may extend up to 30 years depending on the amount loaned. Though this may help most students in paying for debts incurred, consolidation of student loans won’t work for everyone.

If you decide to take an extended payment plan and do your math, you will realize that you’re paying a bigger amount of interest in the long run. If you have a loaned a large amount, it is possible that the total interest will cost thousands of Dollars. It is also possible that the amount you pay upon consolidation is higher than the interest rate you regularly pay. And if you’ve already paid a huge chunk off your loan, then consolidating will only be a waste of your time.

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