The Complete Overview of Federal Student Loans

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<h1>The Complete Overview of Federal Student Loans</h1><strong> Author: <a href='http://www.articleseen.com/profile_Milana Grade.aspx'>Milana Grade</a></strong><br /><p>There are millions of students who are eager to attend school, college or university but do not have financial opportunity. In this situation it will be a wise decision to consider applying for federal or private student aid as a primary strategy. In general there are several types of student aid options available including: student loans (federal or alternative), grants and scholarships. These options can be perfect funding sources if a student knows what are advantages and disadvantages of each one. Student loans Education loans for college students are becoming more and more popular today. It seems that millions of students want to know more about this topic searching various information sources: websites, magazines and journals. There are two types of student loans: federal and private loans. Federal loans are low-interest loans based on financial need (in most cases) that are provided directly from the U.S. Department of Education under Direct Loan Program (DLP or FDLP). Federal student loans are typically coming in the form of: • Stafford loans • Perkins loans • PLUS loans Each type of federal loan has own features and is designed for certain lenders. For example, the Perkins loan is the form of student aid for students who demonstrate significant financial need. Only borrowers with low-income level are awarded by Perkins loans. It's important to notice that the amount of students awarded is limited. PLUS loans designed for graduate students and parents. Stafford loans can be offered in two forms: subsidized and unsubsidized loans. There are also alternative (also called private) student loans. These loans are offered by banks and other private institutions and are credit-based. It means that the bank (like Citibank) will definitely analyze a borrower's credit history and income-level to define if a borrower is credit-worthy. Creditworthiness criteria play an important role. A private lender wants to have a guarantee that a loan will be repaid in the future. Federal and Private Loans Benefits There are advantages of federal financial aid that should be taken into consideration. First of all, federal loans are low-interest. In fact, they are cheapest loans available for students today. The interest rates vary from 5% to 7% per year. In comparison with loans by private lenders federal loans are really low-interest loans. It's important because depending on interest rates the total amount of loan varies. If the interest is high a borrower should give back more money. Federal government is focused on social policy that includes financing education and making it more affordable. For this reason, if a borrower thinks about getting student loans the number one steps is to apply for federal financial aid options. It's the best advice. Private loans can not be considered as low-income loans. In fact they are more expensive. However the main benefit is that private lenders do offer more valuable features for borrowers. They have various types of student loans for certain types of lenders, offer various repayment plans and additional services like consulting. Today there are plenty of private institutions focusing on providing best options for student who want to borrow money. For this reason, each lender does all the best to offer the best services. It's good for borrowers because they have great choice. Always analyze all available private loans and read terms and conditions of each one before applying. However both federal and private loans have the main disadvantage – they must be repaid. This type of financial aid is offered for students but they must give it back. In this situation, college grants and scholarships are much more appealing. They must not be repaid. Students receive it for free.</p><strong>About the Author:</strong><br />Milana Grade is respected <a rel="nofollow" href="http://www.studentaidanswer.com/federal-student-aid">federal student aid</a> specialist. If you want to know more about <a rel="nofollow" href="http://www.studentaidanswer.com/federal-loans">federal low income student loans</a> and get advices on this topic. Please, visit our Federal Student Aid website at: <a rel="nofollow" href="http://www.studentaidanswer.com/">http://www.studentaidanswer.com/</a><p> Article Source: <a href='http://www.articleseen.com/Article_The-Complete-Overview-of-Federal-Student-Loans_117963.aspx'> http://www.articleseen.com/Article_The Complete Overview of Federal Student Loans_117963.aspx</a></p>

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Keywords : federal loans, federal student loans, student, loan,

Category : Finance : Loans