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Types Of Federal Student Loans
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Article on Types Of Federal Student Loans
Students who just graduated from high school and are now looking at financial aid options that will help pay for their college tuition should know the types of federal student loans that they can apply for. Limited knowledge on the options available for student loans could result in poor decision-making, and for something as vital as a student loan, this is something that must be avoided. If you want to learn more about the types of federal student loans, then you have come to the right place. This article will talk about the three federal loans that students from low and middle-income households can avail of.
Stafford Loans
A student can avail of a Stafford Loan through the federal government or through the U.S. Department of Education under the Direct Loan Program. There are two types of Stafford Loans: subsidized and unsubsidized. With subsidized loans, students can take advantage of lower interest rates and no interest charges until the time they graduate. On the other hand, unsubsidized loans have fewer eligibility requirements than the former, but applicants should know that interest is charged right after the amount is disbursed up until the time that it is fully paid.
Parent Loans
Also known as PLUS Loans, the parent loans are loans that parents can apply for if they have dependents attending college. Only parents whose biological or adopted children are enrolled at least half-time in a recognized educational institution are qualified. Credit checks are needed, and those with bad credit can always use a cosigner in order to get the loan approved. Unlike others, parent loans do not offer grace periods. The allowable loan amount would be the difference between the costs of the student’s college tuition minus the amount of any financial aid that he or she has received.
Perkins Loans
This loan is one of the most common types of federal student loans, however, unlike the Stafford Loans, Perkins Loans have a fixed interest rate of 5%. The federal government gives the school the money and it is the school that distributes it to the students whose loan applications were approved. Three things are taken into consideration in approving loans and these are: the student’s financial needs, the time of application, and the school’s funding level. The Perkins Loans are available for undergraduate and graduate students who need assistance to pursue a degree.
The aforementioned types of federal student loans ensure that financial difficulties will not hinder individuals who wish to move a step further and get a college degree. The government sets aside about a hundred billion dollars a year to fund federal education loans and if that’s not enough, there are also private student loans that students or their parents can apply for. When it comes to deciding on which of these types of federal student loans to get, ample time is needed in order to carefully assess and evaluate the options available. Have a search around this website for some more up to date information on the various aspects of education financial aid.
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