Government Student Loans

If you want to pursue a higher education but cannot afford the costs of college, there is a great deal of help available. Much of that help comes in the form of government student loans, issued by the Department of Education. These loans are different from traditional bank and/or credit union loans in several ways. The interest rates are lower, there are accommodating payment plans and credit is not a big factor with most federal student loans. The most issued loan by the federal government for students is the Stafford Loan.

Stafford Loans can be either subsidized or unsubsidized. While most all students will qualify for a Stafford Loan, their level of financial need determines whether their loan will be subsidized or unsubsidized. A subsidized Stafford Loan is one for which the government takes care of interest on the loan while the student is attending school. An unsubsidized loan makes the student responsible for all of the interest, even while they are still in school. The amount students can borrow with a Stafford Loan depends on various factors which include their year of study.

Because the Stafford Loan will not cover the total cost of a college education, some students may need more help. The Perkins Loan is awarded to students with a high level of financial hardship. These loans are limited because rather than the government awarding the loan to the student, they give funds directly to the school who provides the loan to the student, and once the funds run out there are no more. Both Stafford and Perkins loans give the student a certain period of time following graduation to begin repaying the debt.

Some government student loans are a bit different and based on credit worthiness, such as the Parent PLUS Loan. This loan is obtained by parents of a child who is enrolled at minimum half-time at a higher education facility. In addition to obtaining a Parent PLUS Loan from the university or college, parents can go to a private lender according to the Federal Family Education Loan program. The most that parents can borrow is the tuition and living costs with any other financial aid subtracted from the loan amount. Repayment of the loan can start immediately or be put off until after graduation.

Yet another one of the government student loans that is similar to the Parent PLUS Loan is the Graduate PLUS Loan. This is an unsubsidized loan that is obtained not by the parents, but by the graduate student. It is also based on credit worthiness. In addition to federal loans, there are grants such as the Pell Grant issued by the government to students who qualify. Unlike loans, grants do not need to be repaid.

Before any type of financial aid can be awarded, the student and/or parents are required to complete and submit a Free Application for Federal Student Aid, or FAFSA. This form is utilized to analyze the level of financial aid the student can qualify for from both federal sources and non-government sources. The FAFSA can be completed and submitted online.

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