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Looking for a Government Student Loan?
Many people heading off college are in need of some financial
assistance. There are a few ways to help the college student
with his or her finances. Its the government student loan
and they are a form of financial assistance provided by our
federal government. To be eligible for a government student
loan post-secondary students to supplement student and family
resources. These loans are interest free while you are in
college while doing your studies, and can help you to finance
your education. The main government student loan used today
is called the Stafford Loan.
Federal Direct Stafford/Ford Loans:
The student will fill out an application with the school that
they wish to attend. The school will then determine if the
student is in need of financial assistance. With this type
of loan the Federal Government pays the interest in certain
situations, like if the student is in school, or during the
time they are in school if on a part-time enrollment.
Federal Direct Unsubsidized Stafford/Ford Loans:
This type of government student loan is unsubsidized and therefore
carries an interest rate. These are given to any student who
applys and qualifies. The advantage of this type versus an
unsecured loan through a bank is that the interest is usually
less and the time in which you have to pay these usually starts
after one completes their education.
Federal Direct Consolidation Loans:
This type of government student loan combines all federal
loans into one monthly payment. Government Student Loans have
different ways in which to repay the loans. For Direct Subsidized
Loans or Direct Unsubsidized Loans there are four different
ways you can repay these loans. For Direct PLUS Loans you
may not use the last option below. Here is a list of options
you have available to repay your government student loans.
Repayment Plan (Standard)
This plan has monthly payments that can not be changed; the
lowest payment would be $50 per month. It also is set for
a certain amount of time up to 10 years. Since this plan is
usually paid in a shorter amount of time than other direct
student loans you will usually pay less total interest.
Repayment Plan (Extended)
According to how much money is borrowed this loan can be extended
to as long as 12 to 30 years. You will still pay the same
monthly payment without it changing but they can be less than
what you pay with the above plan but not less than $50 per
month. The interest rates will probably be higher since the
loan is for a longer period of time.
Repayment Plan (Graduated)
This type of government student loan will allow you to start
out with low monthly payments that will increase gradually
every two years. The repayment period is the same as the plan
above depending on the amount of money you borrow. Again the
interest will probably be higher since the loan is for a longer
period of time.
Repayment Plan (Income Contingent)
This plan is based on the amount of your government student
loan and your monthly income. If your income decreases the
monthly loan payment will also decrease, the same with increases,
if your income increases so will your monthly loan payments.
You will have up to 25 years to pay the loan, any money left
owed after that time will be released. You may still have
to pay taxes on the money that was released.
Another type of government student loan available is the
Perkins Loan. This loan is given to students with exceptional
financial need. It is similar to the Stafford Loan as the
school acts as the lender using funds from the federal government.
The amount of the government student loan is usually $4,000
per year for undergraduate students and $6,000 per year for
graduate students. There are no fees involved with this loan
but the interest rate is 5% with a 10 year repayment plan.
A government student loan is a great program don’t forget
to apply before class dead lines for enrollment.
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