Introduction To Federal Student Loans
Very few high school graduates will find themselves in the enviable position to be able to pay for their college tuition as they go. Most college newbies end up getting student loans to fund their education.
The most popular student loans these days is the federal student loan. Many federal loan types exist for students. The ones that are used the most are subsidized and unsubsidized loans.
Subsidized loans are for students that have a legitimate financial need per regulations of the Federal Government. No interest has to be paid on this type of loan while still in school or in grace or deferment periods.
An unsubsidized loan is for students and it is not dependent on financial need. This loan will acquire interest during the loan period. Unlike subsidized, interest is accruing while the student is in school, and during grace and deferment periods.
PLUS (Parent Loans) Loans are unsubsidized loans. This type of loan is one that parents get to pay for their children’s college. Graduates and professional students may also get PLUS loans. Education expenses are paid for by federal student loans. During this time, interest is charged throughout.
You can expect an easy application and approval process. Students are required to fill out a FAFSA. (Free Application for Federal Student Aid) The process has been made easier by submitting it online.
The student application deadline is June 30 of every year. Parents will have to submit their most up to date tax information if they have a dependent student. If the student is not living with their parents, they are required to submit their own tax information.
The monthly payments are bearable on these loans and the interest is low. After you have been away from college for about nine months, repayment will begin. You will absolutely have to pay federal student loans back.
However, if you are not employed after you get out of college, you can get an extension for a certain period of time. Failure to pay back these loans can get the borrower in trouble. The Federal Government has the authority to impose a number of penalties since they are federal student loans.
You can expect the Federal Government to withhold tax refunds, garnish wages, or litigate in court as a penalty for failure to pay back the loan. Student loans cannot be included in a bankruptcy according to the Federal Government.
Federal student loans are some of the best loans for students to have. The best student loan will vary depending the individual student’s financial need.
I agree 100% that the federal loans are the route to go.
The only thing you must caution students on is not relying 100% on loans for funds. Its tough, but you need to try and work and not be overly wasteful with your money if you need to take out a loan.
I have seen too many people take out 50,000+ in loans, while not even working a job during school. They later see 300-400/month payments, which can really hurt once your out in the real world.
Loans are a great option, especially for those who don’t have the financial independence to go to school. But be cautious.
Comment by Bill@MBA Program — September 16, 2009 @ 9:15 am
HI,
I am glad to know about the federal students loan, because this is really an interesting topic. It is really a nice topic to discuss. Anyways keep it up and keep continue.
Comment by Tiara@auto loan calculator — December 29, 2009 @ 2:28 pm