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Why Federal Student Loans Are Great Loan Options
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Posted On :
Nov-17-2011
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Article Word Count :
612
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The article covers essentials of federal loans. Read the overview of this type of federal student aid and discover main benefits in comparison with private loans.
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There are large numbers of students who are eager to attend school, university or university but do not have financial opportunity. The answer on university funding question is to apply for student aid by the federal government or private lenders offering affordable student loans.
There are three main categories of available financial aid for students that includes: federal or private loans, grants, scholarships. As everything in life, all student aid options have prons and cons making them exclusive in from one point of view and even dangerous from the other.
Low-income loans
According to the fresh study student education loans are well-known way of funding. People are searching the Internet, magazines and websites for more articles or reviews on this topic and it's understandable because education is significant.
Loans can be offered in two main variations, as federal loans and as private loans. Federal loans are cheap loans because require paying the cheapest rates based on financial need.
The most popular forms are:
- The Stafford loan
- The Federal Perkins loan
- Direct PLUS loans
All federal loans are not similar and have own particulars making them perfect funding options for all types of borrowers. As an example, the Federal Perkins loan is only for student s who have very low-income level and demonstrate high financial need. Only borrowers with low-income level are awarded by Perkins loans. The number of student who receive funding through Perkins loans is small. PLUS loans designed for graduate students and parents. The two forms of federal Stafford loans are subsidized and unsubsidized.
However federal loans are not the only loans, there are non-federal loans. These loans are offered by banks and other private institutions and are credit-based. All banks are always pay attention to income-level and credit-score for defining whether or not a borrower is eligible for. Creditworthiness is really important. A bank wants to receive money back in time.
Federal Loans: Benefits
Federal loans have strong benefits making them appealing for borrowers. First of all, federal loans are low-interest. They are inexpensive offer the lowest rates to pay. In general, a borrower pays only the 5-7% interest rate. Analyzing rates by private lenders, federal loans are very cheap. It’s important because depending on interest rates the total amount of loan varies. This benefit must be the first.
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 step is to apply for federal aid options. It’s the best advice.
Non-federal loans can not be considered as cheap loans. In truth they are more high-priced. Yet the foremost benefit is that private lenders do offer more significant features for borrowers. They have a mixture of types of student loans for certain types of lenders, offer a variety of repayment plans and other services like consulting.
In the present day there are lots of private institutions focusing on providing superlative options for students who want to borrow money. For this reason, each lender does all the best to offer the greatest services. It’s good for borrowers because they have great choice. All the time analyze all available private loans and read terms and conditions of each one before applying.
In spite of this both federal and private loans have the main disadvantage - they must be repaid. This type of student aid is offered for scholars but they must give it back. In this situation, school grants and scholarships are much more appealing. They must not be repaid. Students receive it for free.
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Article Source :
http://www.articleseen.com/Article_Why Federal Student Loans Are Great Loan Options_105663.aspx
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Author Resource :
Milana Grade has written numerous articles on federal student aid. She has helped thousands of students to apply for aes loans and student loans with no cosigner.
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Keywords :
student loans, federal loans, stafford, perkins, plus,
Category :
Finance
:
Loans
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