Student Government Loan
With the cost of education reaching the sky, most of the students opt for educational loans for pursuing further education.
These student loans can either be taken through government agencies or from private lenders. Usually students prefer to go in for the student government loans as they come with better interest rates and flexible terms and conditions.Moreover the government loans offer various programs that can be afforded by the student in case they are unable to pay back the loan.
The student government loan includes the following:
- Stafford loans
- Perkins loans
- PLUS loans
The earlier two i.e. the Stafford place and Perkins loans are given directly to students where as the PLUS loans can be availed by parents for sponsoring the education of their child.
To be eligible for these loans there are certain requirements that the applicant needs to fulfill. In case you fail to meet any of the requirements then you can be declined of the loan. Some of the most important requirements include:
- You are required to be a U.S citizen
- You should have a valid Social Security Number
- You should be eligible for higher education
- You should not have any default or bankruptcy on your credit report
When talking about finance help from the U.S Department of Education Aid there are three options that can be considered. These options include Student loans, Federal Grants, Student Work Programs.
Let us see these types of loans in detail.
Stafford loans:
The government gives out the federal Stafford loans. However, the private banks or lenders also give out these loans. These loans are made available through the federal family education program. So in case of private lenders also the government sponsors these loans. Some colleges and universities that would have their own student loans programs. In such cases also the government gives out the loan programs under the Federal direct loans. The government would give the funds to the university and the university would then give it out to the student. However when you go for such programs you would not get to compare the offers from various lenders to pick which on Stafford student loan would be the best for you.
The interest rates on these types of Stafford place loan differ from one school to another so you can check before taking admission the interest rates with the particular schools. When talking about Federal Stafford Loans there are again two types either subsidized or unsubsidized.
You can apply for the Staffordplace student loan by completing the Free Application for Federal Student Aid (FAFSA).This is the form that is required to be filled every year by students who are either studying or are planning for studies in both graduate as well as undergraduate courses. There are times that the parents are also required to fill out the form to assess their financial condition. This form has various questions pertaining to the financial condition of the student and the family. These figures are then used to calculate the Expected Family Contribution. The Expected Family Contribution can vary based on a number of factors.
Previously the interest rate on the Stafford loan was based on an adjustable formula. With this rule the rates were adjusted annually and were based on the 91-day T-Bill. But since 1st July 2006 all the Stafford loans are issued at fixed interest rates. For most of the loans providers and the direct laons the rate is set at 6.08% presently. With the present rates being effective some of the loan providers are foregoing the margins that they are entitled for under the Federal program.
Perkins loans:
These loans are given out by the school rather than the federal government. For this also the student should be registered with a certified educational institution. These loans are a lot similar to the subsidized Stafford loans. For being eligible for Perkins loans you should be eligible for enrolling in a recognized school for at least a half-degree program, you should be a citizen of the United States or should have an eligible non-citizen status. Besides you should have a satisfactory academic performance and should not have defaulted previously on any Title IV education loans.
For applying for this loan you are again required to fill the Free Application for Federal Student Aid (FAFSA) similar to the Stafford loans. You school will be entitled for paying you directly or you can apply the loan directly towards the charges as per the school fees.
PLUS loans:
Parents for the education of their children take these loans. The student must be registered with a credited educational institute. The parents are liable to pay off the loan on behalf of the children.
Besides these loans there are many private banks and institutions that give out these loans. These institutions charge a higher rate of interest and the terms are not very flexible. Besides the interest rates would vary from one lender to another.
Getting a bad credit student loan is not a problem if your parents have a good credit rating that is better than your credit rating. If your parents have a good rating then they can take a PLUS loan that is given to parents to fund the education of their children. In such case The United States Educational Department presupposes that the parents would be liable to make payments towards the loan taken for the education of their children. The PLUS loans that are given out to the parents are likely to cover up the costs that the parents are supposed to pay towards the loan of their children.
