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Government Student Loans

Many students rely on federal government student loans to finance their education. These loans generally have low interest rates and some do not even require credit checks or collateral. Government loans also provide a variety of deferment options and extended repayment terms. In terms of available loan programs, the following information provides a background on government loans. Government loans are borrowed money that must be paid back with interest.  Federal loans are available to both undergraduate and graduate students.  The amount you may receive depends on your grade level (freshman, sophomore, junior, senior).  And unlike grants, students do not have to demonstrate financial need to qualify for a government loan.

What are Government Student Loans?

These loans supply financial help for students enrolled at a school that participates in federal aid programs. When referring to a “school,” this means a two-year or four-year public or private college, university, or trade school. Private organizations supply these government student loans under accordance from the U.S. Department of Education through the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP).

The Difference Between Grants and Loans

The difference between a government student loan and a grant, such as a Pell grant, is quite simple. The grant is a gift. It does not have to be repaid. The government student loan is, as the name implies, a loan which must be paid back. Also the Pell grant is needsbased. A student will need to qualify for a Pell grant based on financial need. Almost any full time or more than half time college student can qualify for a government student loan.
Federal Stafford Loan

The Federal Stafford Loan comes in two varieties: subsidized Stafford Loans and unsubsidized. The subsidized Stafford Loan is reserved for students with the most need and the interest that accrues is paid by the federal government, it’s subsidized. Unsubsidized Stafford Loans are available to almost everyone, however you are responsible for payment of monthly interest while in school (some lenders allow you to defer the interest).

Graduate PLUS Loans

Graduate PLUS Loans are federal student loans for Graduate or Professional Program Students that also have a fixed interest rate and higher borrowing limits than other federal loans. Grad PLUS loans are meant to supplement Stafford Loans. Make sure to borrow the maximum in Stafford Loans before using Grad PLUS.

Federal Perkins Loan

The Federal Perkins Loan is awarded to students with exceptional financial need. The program is campus-based. The federal government metes out funds to campuses annually. The campus in turn awards students approved for the Perkins program on a first-come, first served basis. For this reason students are advised to apply to the campus early.

Lower Monthly Payments With Government Student Loans Consolidation

Many people, at one time or another, choose to consolidate their federal student loans from college. Sometimes they choose to do so because it saves them money; other times, consolidating actually causes them to pay more money in interest over the life of the loan. Why would they do it if it ends up costing more? Because of the flexibility of repayment plans offered through government student loans consolidation.