Government Student Loan
College education has become more and more expensive over the years, making it harder for some students to finance their education. Thankfully, the government has recognized the needs of these individuals, which is why the federal government allows students to apply for a government student loan to help them acquire their degree. This article gives you information about government student loans to help you decide whether to apply for one or not.
What are student government loans?
As the name implies, a government student loan is a type of loan offered by the government to individuals who need financial aid to help them pay for their education, regardless of whether they plan on taking a two- or a four-year course in a college, university, or a trade school. Unlike grants and scholarships, loans will need to be paid back by the student (which is usually set after the student graduates from his or her course). Even so, the interest rates of a government student loan are much lower compared to a loan taken out from a private lending agency and dont require any credit checks or collaterals. Furthermore, the government also allows deferment options and extended repayment terms to make repayment much easier for the borrowers. Whats more, a government student loan does not only cover tuition fees, it also includes the money you will need to pay for your other expenses, such as lodging, money for books, etc. These features make government student loans an attractive option for students who need assistance to help them finance for their education.
Kinds of government student loan
There are five different kinds of student loan programs offered by the government. These are:
* Stafford loans. There are two kinds of Stafford loans: subsidized and unsubsidized. Subsidized loans are a type of loan wherein the government foots the loan interest while the student is still in school, while the unsubsidized loans require the students to pay for the interest even while they are studying, although they can defer payment until after graduation. In order for a student to qualify for a subsidized Stafford loan, he or she must need to show financial need. A large number of students who receive a subsidized Stafford loan are those who have a family adjusted gross income under $50,000.
* Perkins loans. Perkins loans are available for students who have an exceptional financial need. Unlike the Stafford loan, the money is sent directly to the schools financial aid office. This will effectively make the school the lender of the money, and will be the one to disburse the money to you, usually set at two separate payments within the school year. College students who apply for a Perkins loan can borrow as much as $4,000 annually, while graduate students can borrow $8,000 per year.
* Parent PLUS loans. If the parents are willing to help the student in financing for their education, they can apply for Parent PLUS loans, a type of student loan that allows parents (or guardians) to have the loan under their name. This loan is only available for parents or guardians who have a good credit rating. If they have a bad credit history, their loan application will most likely be denied.
* State-specific loans. Some states also offer student loans for residents of the state.
* Graduate PLUS loans. As the name suggests, Graduate PLUS loans are a type of government student loan available to postgraduate students who are looking for financial aid to help them pay for their education. Unlike the other kinds of loans, this isnt need-based, but rather credit-based, making it more similar to private student loans, albeit with a lesser interest rate.
Do note that its also possible for graduate students to apply to the other types of government student loans mentioned above.
How to apply for a government student loan
Applying for a government student loan isnt that difficult. You will need to first fill out the Free Application for Federal Student Aid (FAFSA). Some of the information you will need to fill out on the application include your contact information, the information about the school you plan on attending, tax information (both yours and your parents), and other similar forms. The FAFSA form will also list down the options you have for government student loans (as well as grants and scholarships), so choose the option that best suits your situation. Once you fill up the form, you will need to submit the application. The state will then evaluate your personal situation to see whether you qualify for the loan, and if so, how much money you will be given.
Reminders about government student loans
Some tips and reminders that you need to know about government student loans include:
* The loans will need to be paid back. Again, the money that you will be receiving from the government for your education is not free. You will need to pay the sum back plus interest, so make sure that the amount you borrow is actually something that you will be able to pay for once you graduate.
* Apply for grants, scholarships, or other loans. Sometimes, even the amount you get from the loan may not be enough to see you through until graduation. If this happens, consider applying for a grant, scholarship, or another loan to help you pay for your education. Its possible to combine these, so do ask the school what options are available to you. If you plan on applying for another loan, again, make sure that you only borrow an amount that you are sure you can pay for after graduation to avoid being chased by your creditors.
* You will need to apply for the loan yearly. A single application for a student loan isnt enough to pay for the whole length of your education. After all, there may be terms or semesters wherein you wont be needing financial aid, as you have the means to pay for these expenses. If you need the money for financial support, make sure that you apply yearly to get the loan.
* Your loan will depend on your unique situation. The government evaluates what your situation is, using the details to determine how much you will be given. As such, its not unheard of for two students belonging to the same year and in the same course to receive different sums from their loans.
* Pay as soon as you can. Over time, the interest rate accrues, so make sure that you repay your loan as soon as possible so you dont end up spending more than you have to.
A government student loan can help you in paying for your education. Nonetheless, its important to remember that at the end of the day, its still a loan, which means you also have the responsibility to pay for it. As such, make sure that you manage your finances wisely so you wont have any difficulties in making the repayments when the time comes.