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Federal student aid
| Let us assume you have gotten all the grants and scholarships you can, but you still need money for your education. In that scenario its time to look at loans. But the question now arises: Which is better federal student aid loans or private loans.
Federal loans Theoretically speaking if you need to take out a loan to help pay for your education, you should always look at federal loans first. It is worth mentioning in this regard that the largest source of education loans around, ederal student aid are long-term loans with low interest rates designed for students who need money for their educations. There is no denying that they have several benefits when compared to other borrowing options, including
- First and foremost lower interest rates - In addition options to postpone payments - Most importantly longer repayment terms - Last but not the least easier credit requirements
In simple terms, eligibility for some of these loans, such as the Federal Perkins Loan and the Subsidized Federal Stafford Loan, are needs-based, while others are not. In an ideal scenario you will need to complete a FAFSA to apply for these loans.
According to experts, the most common federal student loans are listed below:
Federal Perkins Loan Fact remained that the federal student aid is a low-interest loan available to students who have exceptional financial need, based on the information provided on their FAFSA. Furthermore it is worth remembering that undergraduates can borrow up to $4,000 per year, while graduate students can borrow up to $6,000 per year.
Federal Stafford Loan In addition the Federal Stafford Loan is available to undergraduates and graduate students. It is worth mentioning in this regard that loan amounts depend on a students year in school and whether they are financially dependent or independent. Apart from all this your colleges financial aid office determines your eligibility.
If experts are to be believed, Stafford loans can be subsidized or unsubsidized. Theoretically
speaking financial need determines which type a student is eligible for. There is no hiding the fact that subsidized loans is based on financial need. On the other side of the coin the government pays the interest while the student is in school, in deferment, and in their grace period.
Furthermore it is worth noting that unsubsidized loans are available to all students, regardless of income. Fact remained that the student is responsible for all interest.
Federal PLUS Loan In simple terms the federal student aid (Parent Loan for Undergraduate Students) is a low-interest education loan for parents. It is worth pointing that each year, parents can borrow up to the cost of attendance, minus other financial aid received (scholarships, grants, student loans, etc.).
Always remember that the PLUS loan is not based on financial need. Because of this simple reason qualified applicants must pass a credit check.
Private loans
On the other side of the coin private loans are designed to supplement federal loan programs and are available from schools, banks, and education loan organizations. More often than not they are usually used to cover education costs that cannot be met by federal aid.
In theory terms for these loans vary according to the lender and your credit history. Thats why it is of utmost significance that you keep these things in mind as you consider taking out a private loan:
- First and foremost, Private loans have credit requirements, and you may need a co-signer - It is worth mentioning in this regard that the lender determines the interest rates and fees, which may be affected by your credit score - In addition private loans may not offer deferment options - Last but not the least private loan programs may offer borrower benefits, such as interest rate discounts or rebates
Theoretically speaking no matter what type of loan you take out, be conservative and borrow wisely! Fact of the matter is all loans have to be repaid, whether federal or private. There is no denying that the Federal government is one of the best sources for college financial aid. As a matter of fact from low interest loans to free grants, the array of government aid is open to just about everyone. Furthermore it is worth noting that as long as you have passing grades and financial need, you almost certainly qualify for something.
According to experts, the search for federal student aid begins with the Free Application for Federal Student Aid (FAFSA). More often than not this form can be filled out on paper or submitted online. In an ideal scenario once it is processed, the government will make a judgement about the level and kinds of aid you are eligible for. In addition to receive funding, you must have a high school diploma, GED certificate, or have met state standards to enroll in a qualified higher education school. Keeping aside all this you must also be a U.S. citizen or an eligible noncitizen, such as a permanent resident. In simple terms the key factor in determining how much aid you receive will be financial need, not grades. Of course, it is worth noting that if you fail to maintain passing grades, you will lose all assistance. Though, it is not necessary to be an A plus student.
It is worth mentioning in this regard that undergraduates who meet the need criteria can receive Pell Grants. Theoretically speaking these range from $400 to $4,050 a year. In an ideal scenario students with exception financial need may qualify for a Federal Supplemental Opportunity Grant (FSEOGs), which ranges from $100 to $4,000 a year. Always remember that the amount you can receive may be reduced if you have other sources of aid, such as a scholarship. In an ideal scenario these grants do not have to be paid back.
More often than not federal loan programs are offered to supplement grant awards, and for those who were not eligible for a grant. As a matter of fact for some loans, you do not have to demonstrate need. In simple terms the amount you can borrow will depend both on your school expenses and your grade level. Other Articles |
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