Federal Student Loans: Get The Money You Need For College

Last updated on November 15, 2017

In this great country of ours, anybody that wants to go to college and gets accepted into college can have the money they need to attend. It doesn’t matter how much money you have or don’t have, you can get a quality college education if you have the desire to obtain it. A federal student loan is designed to get you the money you need to pay for college expenses, like books, tuition and basic living expenses. Government student loans are the most affordable and best option for financing your college education for several reasons.

  • Guaranteed Acceptance: Federal direct student loans are automatically granted as long as you are attending an accredited college. This means you can get a loan regardless of your credit history.
  • Interest Rates: The interest rates on student loans are generally lower than getting a personal bank loan to pay for college. Some interest doesn’t even begin accruing until after your graduate.
  • Flexible Repayments: There are a variety of loan repayment options, deferments, forbearances and even loan forgiveness programs to help you pay back what you borrowed.

Federal direct student loans take on a variety of forms, which fits the needs of every person that applies for federal student financial aid. There are two main types of federal student loans that the will fund the majority of students, the Stafford Loan and the Perkins Loan.

Direct Stafford Loans

Stafford Loans are the most common, lowest cost loans that eligible college students can take. Everyone qualifies for a Safford Loan regardless of financial need or credit score. Borrowing limits on Stafford Loans will increase as students progress through their college coursework. There are two types of Stafford Loans; Subsidized loans and Unsubsidized loans. Subsidized loans are loans where the government will pay the accrued interest while the student is attending school. These loans are granted based on financial need as indicated by the Student Aid Report (SAR) when the FAFSA is filled out. Unsubsidized loans begin to accrue interest from the time the money is borrowed. Students that don’t show a financial need will still be able to take out unsubsidized loans, which is why it’s said that anyone needing a student loan to pay for college can get one regardless of income.

Perkins Loans

The Perkins loan is very similar to the Stafford Loan, but it is entirely based on need. Only those students demonstrating financial need are eligible for the Perkins loan. Unlike the Stafford loan, the Perkins loan has a fixed 5% interest rate, a nine-month grace period, and loan limits different from the Stafford loan. As with the Stafford loan, filling out the FAFSA is necessary to determine if there is a financial need in order to determine eligibility.

Applying for Federal Student Financial Aid

The first step to applying for federal student loans is to fill out a Free Application for Financial Student Aid or FAFSA. Filling out the FAFSA is a process that takes some time to do, but it is necessary to determine which types of federal student aid students will be eligible to take. It is also useful in determining eligibility for grants and some scholarships that are based on need.

Once you are enrolled in a college or university, and you have filled out the FAFSA, your college financial aid office will have financial aid counselors that will assist you in applying for the Stafford loan through a participating bank or other lending institution. The Perkins loan will be borrowed directly from the college or university you are attending.

Student Loan Repayment

Once you have completed college, it’s time to repay your student loans. Most students will be able to pay their student loans using the Standard Repayment Plan. The payment will be calculated based on the amount borrowed and the interest rate for a repayment period of 120 months or 10 years. Some graduates may experience financial difficulty and have trouble repaying their student loans. In these cases, there are a variety of student loan deferments, forbearances and repayment options available.

Repayment plans include:

  • The Standard Repayment
  • The Graduated Repayment Plan
  • The Extended Repayment Plan
  • The Income Sensitive Repayment Plan

Deferments and Forbearances can be granted for the following reasons:

  • Enrollment in college (In-school deferment)
  • Financial hardship
  • Military or national/public service
  • Internship or residency
  • Unemployment
  • Disability

Are Government Student Loans Right for You?

A federal student loan is one of the easiest loans you can get; all you need is to have the desire to go to college. Interest rates on government student loans are some of the lowest rates you can get. Federal direct student loans also have some of the easiest repayment terms too. Unlike private student loans, you will never need a cosigner to get a government loan. Successfully paying back your student loans upon graduation will really help you to establish a credit history as you begin your life after college. Is a federally backed student loan right for you? The answer is quite simple, if you need to borrow money for college expenses, then federal student financial aid is something you should consider.