Guide to Federal Student Loans
Paying for college is one of the biggest financial endeavors that you will undertake in your life. Most borrowers and their families can’t afford to pay the price tag without some help. That’s where federal student loans come in. Here we will explain more about them so you know how they might be able to help you with your educational goals.
What are Federal Student Loans?
Federal student loans are one of the types of student loans that you can seek to help pay for tuition, room, and board, and other college-related expenses. They are provided by the federal government and offer flexibility that you typically won’t find in other types of student loans.
The other two types of student loans are private student loans which are offered by banks and credit unions and refinance loans.
You must fill out a Free Application for Federal Student Aid (FAFSA) to get federal loans. You don’t need to have good credit or a co-signer in most cases to apply. There is information that you will need about your parent’s income and tax returns in order to fill out the application.
Congress will set the interest rate on these loans each year and their rates are in most cases lower than a borrower could get from a private student loan. These federal student loans also have many benefits that make them a better choice in most cases. For example, your student loan monthly payments can be tied to your income after you graduate which can make them more affordable.
Direct Subsidized Loans
Most of the federal loans that make up the federal student loan program are from the Direct Loan program. There are two types of loans available with the first one being the Subsidized Direct loan. This loan is meant for students who have demonstrated financial need.
While the student is attending school, the federal government will pay the interest that is accumulating on their loan. After they graduate, the student also gets an additional six month grace period before they have to start repaying their loan.
Direct Unsubsidized Loans
The other Direct Loan that is available is the Unsubsidized Direct loan. These loans don’t require that the student demonstrates a financial need. It is available virtually to every student who submits their FAFSA.
The interest on the loan will accumulated while the student in school. The student is therefore obligated to pay the loan and all the interest that accumulated while they were attending school.
Graduate students who need to borrow more money for their higher education can opt for a graduate PLUS loan. They must meet some general eligibility requirements to qualify and must be at least a part-time student enrolled in a graduate or professional program.
There is also the Parent PLUS loan where the parent is the borrower instead of the student. Undergraduate students who need additional funding can get assistance from their parents to contribute to their education. This is an alternative to dipping into other important funding resources such as a retirement account.
Do you have a question about federal student loans or something else that’s student loan-related? Reach out to us for a free, no-obligation consultation by calling Student Loan Medix at (480) 676-2889 today. You can also reach us for more information at [email protected]
Student Loan Medix
Southfield, Michigan 48033
Phone: (480)- 676-2889
Email: [email protected]