Federal School Loans

Federal school loans are a form of financial aid that is designed by the federal government to facilitate students who want to pursue college programs. The objective of these programs is to enable students with diverse career goals to manage their college tuition and related expenses in an easy way. There are various types of school loans Federal that students can benefit from. These loans are given on the basis on financial need.

Types of Federal School Loans
Federal school loans include Stafford Loan, Perkins Loan and PLUS Loan. The rate of interest in these types of loans is fixed. Also, their rate is lower compared to other kinds of student loans. Stafford loans can be subsidized or unsubsidized keeping in view the choice of the borrower. Subsidized Stafford loans are granted on need-basis while the unsubsidized loans are not based on need. Perkins Loans are also awarded on the basis of need. PLUS loans are designed for the parents of students who want to finance the education of their children. These loans are not based on need but the financial history of the borrower. A Federal loan school always makes a better option compared to the loans that are offered by the private institutes. Graduate PLUS Loans are Federal graduate school loans that are meant for graduate or professional program students. These Federal loans for graduate school also have a fixed rate of interest.
How to Apply for Federal School Loans?
To apply for Federal school loans, students need to complete the Free Application for Federal Student Aid (FAFSA). The information in this form enables the Education Department to analyze what type of a plan students are eligible for.
Benefits of Federal School Loans
Federal school loans are very beneficial for the students who cannot pay for the college programs on their own. As the interest rate of these loan programs is less the rate of interest of other kinds of loans, they make a great source to pay for college. However, it is recommended to explore the option of grants first as they allow students to have free money.

Federal student loans are awarded by the U.S. Department of Education. These offer low interest rates as they are subsidized by the state to facilitate students. These loans also do not require credit checks or collateral. There are a number of options available within the federal loan system which include various scholarships, grants, loans and work study opportunities. Two of the most common types of federal student loans available are the Stafford loan and the Perkins loan. Stafford loan again has two variations: Federal Family Education Loan Program (FFELP) and Federal Direct Student Loan Program (FDLSP).

Frequently Asked Question(s)

Q:As I read about the federal student loan options, there was an option of freezing. Does it effect my credit report?

A:One of the Federal Student Loan Options is freezing the program. It is also known as deferment. What happens in this is that the loan program is halted for a specific period of time, in which your repayment interest rate does not increase if you do not make the repayment. Having said this, it should be noted that there can be a negative effect on your credit report.

Q:I have read about the Federal Government spending cuts. Will this effect government school loans?

A:Federal Government cuts are affecting Americans in their everyday activities. However this should not put you off applying for college; as such loans are still available. It would do no harm to apply for college and submit a FAFSA application- it may be some other funding is available such as a grant or scholarship. Nonetheless private sector loans are always available.

Q:Can you give me some information about federal school loan consolidation programs?

A:Consolidation can be described as combining multiple loans into a single repayment plan. This is designed to help make loan repayments affordable and easy to manage. Federal loans and private loans can be consolidated. Low interest rate, extended payments, and affordability are among the major benefits of student loan consolidation programs.

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