What are Federal Student Loans
Thursday, September 10th, 2009 Subscribe To Our Feed
After graduation, most high school seniors will not be able to pay for college outright. Student loans are usually what new college students get to pay for their education.
Federal student loans are the most widely used student loans today. Different types of federal loans exist for students. Subsidized and unsubsidized loans are the two most commonly used.
Subsidized loans are for students that have a legitimate financial need per regulations of the Federal Government. The student does not have to pay interest as long as they are in school on a full or part time basis, grace or deferment periods.
The financial need of the student is not a factor in unsubsidized loans. Interest is charged with this loan. Unlike subsidized, interest is accruing while the student is in school, and during grace and deferment periods.
PLUS loans are one type of unsubsidized loan. These are loans that parents get and they have dependents that are college students. PLUS loans are also used for professional and graduate students. Federal Student loans help pay for education expenses. During this time, interest is charged throughout.
Federal student loans have an easy application and approval process. Students have to fill out a FAFSA (Free Application for Federal Student Aid). The process has been made easier by submitting it online.
Students must have their application completed and submitted by June 30 of every year. Parents of dependent students have to submit their most current tax information. Students not living under their parent’s roof will be required to submit their own tax information.
The monthly payments are bearable on these loans and the interest is low. Loan repayment will begin approximately 9 months after college begins. Federal student loans must be paid back.
However, if you are not employed after you get out of college, you can get an extension for a certain period of time. Borrowers may not want to deal with the consequences of not paying back these loans. Since they are federal student loans, the Federal Government can impose a number of penalties.
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. Students have to choose the best student loan for their financial needs.
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