Federal Student Loans

You want to go to college or university, but cannot afford the tuition and fees. Therefore you can’t go to school as you wish. Congratulations! You’re eligible to get federal student aid. Whether you’re starting your college life or returning to school after a period of time off, you can apply for federal student aid if necessary. It’s the largest source of aid for students in America. Federal student aid mainly comes in grants, work-study and federal loans.

Federal student loans are a big portion among the federal student aid. Unlike grants and scholarships, federal student loans must be paid back. Receivers must repay with interest. Federal student loans are available for students who attend four-year colleges or universities, community colleges and career schools.

Who Can Apply for Federal Student Loans

Financial need and several other factors decide the eligibility for most federal student loans. The eligibility requirements for different federal student loans also differ.

Some most common requirements for students to obtain federal student loans include:

  •  Applicants must demonstrate financial needs.
  •  You must be a U.S. citizen or eligible noncitizen.
  •  A valid social security number is required.
  •  You need to be enrolled as a regular student for a degree or certificate.
  •  Satisfactory academic progress in college or career school is needed.

Of course, many additional requirements apply. It depends on the type of student loans you’re applying. The U.S. Department of Education offers several different types of federal loans for students and their parents. Each program has its own advantages and disadvantages.

• Federal Perkins Loans – This need-based student loan is offered for undergraduate and graduate students with extreme financial needs. It’s a low-interest loan that carries a fixed interest rate of 5% during the 10-year repayment period. All Perkins Loans are subsidized and are made through your school.

• Stafford Loans – Stafford Loans can be either subsidized or unsubsidized loans. Direct Federal Loans or Subsidized Stafford Loans are interest-free for students. But students are required to pay the interest for Unsubsidized Stafford Loans while you’re still at school.

• PLUS Loans – Parent Loan for Undergraduate Students is different from loans made to students. When children are enrolled at least half-time at an approved higher education institution, their parents can apply for PLUS Loans. Unlike other type of federal student loans, PLUS Loans doe not have grace period. It’s the parents who take responsibility of making payments on these loans.

Some other types of federal student loans are also available, such as Consolidation Loans and Alternative/Private Student Loans. All these federal student loans feature different interest rates, borrowing limits and repayment options. It’s not difficult to select the right one based on your financial needs.

How to Apply

Now applying for federal student loans is quicker and easier than before. If you’re eligible for a certain type of federal student loan, start your application now. Follow the simple steps below and you can simplify the application process.

• Complete the FAFSA

First you need to visit the website www.fafsa.gov and fill out a form of the Free Application for Federal Student Aid. Some documents are needed for your application, like your driving license, social security cards and income tax returns etc. If you’re visiting the website for the first time, you need to apply for a PIN to access your FAFSA account.

• Wait for Results

After you submit your FAFSA, you’ll receive a Student Aid Report if your application gets approved. Of course, you can log in your FAFSA account with your PIN on its website to see the results. After getting your SAR, you can make corrections online if there’s something wrong.

Pay special attention to the deadlines for the application of federal student loans. Besides the federal and state deadlines, your school might also have a deadline. Make sure to submit your application before the deadline.

Federal Student Loans – Make Your College Education More Affordable

Since the increasing tuitions make colleges and universities out of reach for most students, federal government has to find out ways to make higher education affordable again. Well, that’s why there are so many federal student loan options available. They are low-rate loans that are funded by the government and regulated directly by the U.S. Department of Education.

1. If the cheapest interest rate is what you are looking for, considering taking a Perkins loan.

No matter you are undergraduates or graduates, you might be eligible for Perkins loans. Their interest rate which is as low as 5% and no origination fee make them desirable options for most students. Besides, you will be allowed to borrow up to $6,000 each year and the annual maximum loan amount is $27,500.

But do remember it also comes with federal student loan limits. For undergraduates, the annual loan amount is capped at $5,500. And if you wish to use Perkins loans to cover your undergraduate and graduate expenses, the total amount you can borrow is $40,000.

2. Have no credit history? Don’t worry. Stafford student loans don’t check credit score.

Most college students have never used credit card before, and as a result, it’s difficult for them to take loans from banks or private lenders. Fortunately, the federal government offers Stafford student loans that don’t require good credit. Both subsidized and unsubsidized are available for you at affordable rate – 6.8%. More amazingly, the origination fee is only 1%.

3. For large amount student loans, you can give a thought to PLUS loans.

PLUS loans are only accessible for credit-worth graduates and parents of dependent students. Unlike Stanford and Perkins which always decide the loan size based on your demonstrated financial needs, PLUS loans do not limit the maximum amount you can borrow. However, they come with high interest rate – 7.9% and costly originate fee (4%).

Another fact worth your attention is that the interest will accrue immediately after the first disbursement. That might lead to a lot of interest cost. If you land a low-paying job after graduation, chances are you will be plagued by high federal student loan payment.

Things will be even worse if you’ve taken more than one federal student loan. After making repayments for your Stanford student/Perkins loan or Nursing School loan, you might no longer have enough money to repay your PLUS loan. If you find yourself struggling to meet your monthly payment, federal student loan consolidation might be the only choice for you.

Though, under the help of federal student loans, it’s indeed much easier for you to go all the way through the school to obtain the degree you’ve always wanted, you need to think carefully before applying. Once you get confused, try to take advantage of federal student loan servicing. Loan servicers can always provide you with lots of useful resources and help you make a wise decision.


Read Also:

Is Federal Student Loan Consolidation Right for You

Applying for a federal student loan takes the hassle out of receiving a private loan with a higher rate. Federal student loans have many advantages over private loans, like lower interest rates, and more flexible repayment options. Many different types of federal student loans are available to help students and parents pay for their education costs.