Do You Know What Kind Of Federal College Student Loans Are Available?
Stafford college student loans are generally for undergraduate and graduate students. There are two types of Stafford college student loans, subsidized and unsubsidized.
• Subsidized Stafford college student loans will provide low interest rates and are available to students who have demonstrated financial aid need based on income and other important information provided on the FAFSA. A credit check is not required to receive this kind of loan. The federal government will pay the interest on this college student loan up to six months after the student is no longer enrolled in school at least half time.
• Unsubsidized Stafford college student loans provide low interest rates and are available to all students regardless of financial aid need (although the FAFSA still must be filed). A credit check, again, is not required to receive this kind of loan. Either the student will be responsible for the interest, which can be paid while the student is in school or it can be accrued and then added to the principal balance when the student starts repayment, which will also occurs six months after the student is no longer enrolled in school at least half time.
Plus loans are low interest college student loans that parents are able to obtain to help pay for the cost of education for their children. In addition, graduate students can also obtain a PLUS loan to help pay for their own education. PLUS loans will require a credit check and, in some cases, an eligible cosigner. Repayment of a PLUS loan will begin following the final disbursement of funds for the year. Graduate students might be able to defer repayment of their PLUS loan until after they are no longer enrolled in school at least half time, although the interest will continue to accrue.
Consolidation college student loans will allow a student or parent borrower to combine multiple federal college student loans into one loan with one monthly payment. A federal consolidation student loan cannot include a private college student loan. However, some private student loan lenders will probably offer consolidation loans themselves. Borrowers should know that they will lose their federal student loan benefits if they do consolidate their federal college student loans into a private consolidation loan. Borrowers should always use federal college student loan options before considering a private consolidation loan.
A Federal College Student Loan Will…
• Allow students and their parents to utilize and borrow money to help pay for there college education through programs supported by the federal government.
• Offer a lower interest rate and will give them a better repayment benefit and options than private college student loans.
• Be available to students and parents that need financial aid in paying for college – in many cases, regardless of income level or there credit history.
Students and parents should always use federal college student loan options first before considering a private college student loan. To apply for a federal college student loan, complete the online tool, the Free Application for Federal Student Aid (FAFSA).
For additional information on the federal student financial aid programs, consult the Department of Education’s free publication Funding Education Beyond High School: The Guide to Federal College Student Financial Aid, which may be obtained by visiting www.federalstudentaid.ed.gov/pubs or calling 1-800-4-FED-AID.
