Introduction To Federal Student Loans
After graduation, most high school seniors will not be able to pay for college outright. In order to pay for their education, many college goers lean on student loans.
Federal student loans are the most widely used student loans today. Different types of federal loans exist for students. The two most common categories are subsidized and unsubsidized loans.
Subsidized loans are for students that have a legitimate financial need per regulations of 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.
Unsubsidized loans are not dependent on the student’s financial need. Interest is charged with this loan. This includes the times when the student is enrolled in school, grace and deferment periods.
PLUS (Parent Loans) Loans are unsubsidized loans. This type of loan is acquired by parents who have children that attend college. Graduates and professional students may also get PLUS loans. These federal student loans help to pay for education expenses. During this time, interest is charged throughout.
Federal student loans have 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. Current tax information from parents who have dependent students will have to be submitted. If the student is not living with their parents, they are required to submit their own tax information.
With low interest, you will find the monthly payments very reasonable. 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.
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.
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.