Hond Financial

There are not many high school graduates in the enviable position to be able to pay for their college tuition outright. In order to pay for their education, many college goers lean on student loans.

The most popular student loans these days is the federal student loan. There are different types of federal loans for students. Subsidized and unsubsidized loans are the two that are used the most.

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.

Unsubsidized loans do not depend on the financial need of the student. Interest is charged with this loan. This includes the times when the student is enrolled in school, 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. They are also used for graduate and professional students. Federal Student loans help pay for education expenses. Interest is accrued throughout during this time.

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 is now a breeze with online application submission.

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 interest on these loans is low and the monthly payments are reasonable. After you have been away from college for about nine months, repayment will begin. Federal student loans must be paid back.

After you get out of college, and if you are not employed you can get an extension for a certain period of time. If these loans are not paid back, the borrowers will have consequences to deal with. The Federal Government has the authority to impose a number of penalties since they are federal student loans.

They include withholding Federal tax refunds, garnishing wages, or ending up in litigation. If you are thinking about filing bankruptcy, you should know that the Federal Government does not allow student loans to be included in a bankruptcy.

Federal student loans are some of the best loans for students to have. Each student’s financial need can be met by choosing the right student loan.

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