Looking for a students loan and want to know about Federal Student Loans? You are at the right place. This article is about, “everything you need to know about Federal Student loans.”
Federal Student loans are the most popular kind of students loan in the US. If you are a school student or want to take admission in a college but have some financial strains, then opt for a student loan. Student loans are the best option for a child who wants to study and make a promising career but has economic problems. The US government has set up a finance department which helps students by giving loans. This loan is called the Federal student’s loan.
Types Of Federal Student Loans
1. Direct subsidized loan
This is a kind of federal student loan meant for undergraduate students who are in a need of financial help. A student can avail up to $31,000 worth loan, out of which only $23,000 can be subsidized. This federal loan type comes with an interest rate of 5.04%, however, it can vary sometimes. Your interest rate will be picked up by the US Department of education during school and first half year after you are done with school and during a deferment.
2. Direct Unsubsidized Loan
This type of federal student loan is for undergraduates and graduates. Also, students going for a professional degree can take such a loan. It grants you up to $57,000 worth loan. There is no financial guarantee required. However, you will remain hooked to interest. The interest rate is the same as that of subsidized students loan for undergraduates. However, the interest rate for graduates is 6.59 %.
3. Direct Plus Loan
This is a type of loan which covers any cost which has to be covered. This loan is for parents of undergraduates, graduates or those going for professional courses. The loan amount can be up to the full cost of attendance, less other financial help you receive. The interest rate for this category is 7.59%.
Federal Student Loans: All you need to know
The federal student loans are given to all students who are in a need of financial aid. Federal student loans have nothing to do with credit scores when it comes to direct loans. However, direct Plus loan does require a credit history check.
If you have an adverse credit history then you have to find an endorser or guarantor. The guarantor assures the Federal board to repay the loan if it’s not paid by the student. Besides, you can also provide the federal department, documents to prove that your credit history was because of some unforeseen Conditions.
Federal Student Loans vs Private Student Loans
When it comes to federal vs private, many factors play a role. Private student loans are often hard to get and invites a heavy interest rate. Loan forgiveness is one factor which plays a key role. You cannot apply for loan forgiveness in private loans, unlike federal loans.
Federal Student Loans: Repayment & Forgiveness
Usually, the standard loan comes with a 10 years Repayment period. However, it can be changed depending on one’s need. You can also choose the income-driven plan. The income-driven plan is designed to take into account what you make and how much month is required for a more stable financial condition.
Other than these there are three more types of Repayment plan which ranges from 20 to 25 years. If some amount is due after this period, it is forgiven. This is a very nice way and federal Student loans are mostly famous because of this option. This is one of the most important points which differentiates private student loans and federal student loans.
The public service loan forgiveness plan forgives your federal Direct loans. However, this is only after you make 120 months qualifying Repayment.