College education is expensive. You can spend thousands of dollars just to send yourself to a college or university. This explains why some would never get to obtain a diploma or earn a degree. If you are in such a dilemma, then it is time to set it away. In some cases for some people, there are government student loans that you can depend on.
What Are Government Student Loans?
These are also called federal student loan programs, and as their name implies, these are kinds of loans that are being extended to students of different universities, colleges, and graduate schools.
There are a lot of reasons why students would opt to get these types of student loans. For one, the interest is very low. Usually, it would never go beyond 6 percent annually. What’s more, there is no need for you to pay any interest for a specific period of time and would only accrue once you need to start repaying your debt.
There can also be times when you can defer the payment of your loan. This would normally happen when you are drafted in the military or when you go back to school during the first six or the last five to six months of the school year. Moreover, depending on how much you have borrowed, you can pay the loan within a very long period of time such as 10 years. This would be enough time for you to find a job that would help you make your repayments.
Of course, it is definitely a breather for your family, since your parents do not have to look for ways on how to raise funds for your college education. You can also teach yourself on how to be more responsible since you will be the one who is going to repay the loan later on. You cannot afford not to do so, because it will reflect on your loan records. It will be hard for you to apply for other kinds of loans if you do not follow the stipulations of your student loans.
Types of Federal Student Loans
Another reason why they are so popular is because there a lot of programs that you can choose from. These include the following:
Stafford Student Loans
These are types of loans that are extended to university and college students, even those who are under graduate programs. They are meant to supplement grants, scholarships, and other financial assistance that you could be enjoying now.
One of the benefits of Stafford student loans is they have very low interest rates. They can be offered to you at 5. 6 percent annually. It also has higher borrowing limits, which is $2, 000 or even more than that. A lot of students can easily avail of this kind of loan since there is no need to make use of your credit. You also do not have to make any repayments while you are still in school.
Nevertheless, there are certain requirements that you have to meet. For you to become eligible, you must be a U. S. Citizen or a permanent resident. You also have to check with your college program to see if it accepts Stafford loans. If not, then you have to look for another kind of student loan or perhaps apply for grants and scholarships.
It is also important that you are currently enrolled in a college or university or you are planning to proceed to your enrolment for at least half of the school year.
Direct Student Loans
This is another kind of loan that can be availed not just by students but also by parents. It offers variable interest rates, which means the interest you are going to pay may change after a certain period of time. However, what makes this loan attractive is its flexibility.
There are different kinds of repayment schemes that you can follow such as extended repayment, graduated repayment, income contingent repayment, and income-based repayment. If you do not make a choice on any of the mentioned repayment plans, you will immediately be paying through the standard repayment schemes.
This means that you are going to pay a specific fixed amount every month until you can pay up all your loans. The amount you are going to pay will never go below $50, and you have a decade to make your repayments.
Now, just in case you find this uncomfortable and prefer other methods, you simply need to tell the center controlling direct loans that you want to change your payment scheme.
Perking Loan
In Perking loan, it would be your school that is going to award loans to the students. However, the funds will come from the government. Because the funds are very limited, the loan is extended only to those students who definitely have no capacity to pay for their education or those that can prove that they have “exceptional financial need.”
For you to qualify for the Perking student loan, you have to meet the financial requirements of the school first. Then, you have to be a holder of U. S. Citizenship or permanent residence. If you are a non-citizen, you still need to make your status eligible before you can apply for a Perking loan.
It is also essential that you do not have default repayments or outstanding educational grants and loans. You must also be able to perform really well in your academics as well as enrolled at least half time in your chosen degree program.
How to Determine the Best Student Loan
It is not advisable to apply for different student loans as you will have to suffer from huge repayments later. What is essential is you can choose the best one among them.
The first step is to do more thorough research. Which loans are currently extended to students in your school? What are the repayment plans or how much would the interest rate be?
You also have to start thinking about how to come up with money for repayments. Saving while you are in school may be one of the best ways that you can free yourself from financial debt once you step out of college or university.
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