There are not many high school graduates in the enviable position to be able to pay for their college tuition outright. A lot of college newcomers look to student loans to pay for their education.
The most widely used student loans today are federal student loans. There are different types of federal loans for students. The ones that are used the most are subsidized and unsubsidized loans.
Subsidized loans are for students that have a legitimate financial need per regulations of the Federal Government. The student does not have to pay interest as long as they are in school on a full or part time basis, grace or deferment periods.
An unsubsidized loan is for students and it is not dependent on financial need. During the period of the loan, interest will be charged. This includes the times when the student is enrolled in school, grace and deferment periods.
PLUS (Parent Loans) Loans are unsubsidized loans. These are loans that parents get and they have dependents that are college students. They are also used for graduate and professional students. 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 have to fill out a FAFSA (Free Application for Federal Student Aid). The process has been made easier by submitting it online.
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. If the student is not living with their parents, they are 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.
However, if you are not employed after you get out of college, you can get an extension for a certain period of time. Failure to pay back these loans can get the borrower in trouble. Since they are federal student loans, the Federal Government can impose of number of penalties.
They include withholding Federal tax refunds, garnishing wages, or ending up in litigation. 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. Students have to choose the best student loan for their financial needs.
