Hond Financial

There are not many high school graduates in the enviable position to be able to pay for their college tuition outright. Most college newbies end up getting student loans to fund their education.

Today, federal student loans are the most widely used student loans. There are different types of federal loans that exist for students. Subsidized and unsubsidized loans are the two that are used the most.

Subsidized loans are for college goers that have an appropriate financial need (decided by the Federal Government). While the student is in school, part time or full, or in a grace period or deferment period, no interest has to be paid.

The student’s financial need is not a factor with 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.

A type of unsubsidized loan is a PLUS loan (Parent loan). This type of loan is acquired by parents who have children that attend college. They are also used for graduate and professional students. These federal student loans help to pay for education expenses. Interest is accrued throughout during this time.

You can expect an easy application and approval process. Students have to fill out a FAFSA (Free Application for Federal Student Aid). Online submission has really streamlined the process.

The deadline for applications to be submitted is the 30th of June every year for students. 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. You must pay back federal student loans.

After you get out of college, and if you are not employed 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. The Federal Government will impose and enforce 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. The Federal Government does not allow student loans to be included in a bankruptcy.

Students will find that federal student loans are some of the best for students to have. The best student loan will vary depending the individual student’s financial need.

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