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Every year there are a number of students who seek admission for higher studies. But for some families arranging for funds becomes a problem. But with the help of Federal Government these problems can be solved. These days there are a number of financial aids made available to help families that have problems in arranging for funds.

There are a number of families that belong to the middle-income group but have a high income; this rules out their chances of getting the needed financial aid. But the income of these families may not be enough to fund the education of their children. For such reasons these families turn to Federal education loans for getting aid for financing their childs college expenses.

There are mainly two financial aid programs that are made available to parents by the U.S department of education. These include the unsubsidized Federal Stafford Loans and the Federal Plus loans. Parents who have not used any merit based financial aid for their child they can apply for these Federal Guarantee Loans. Thee loans have several benefits apart from having a low interest rate. These loans programs can be used by parents to meet all kinds of expenses related to the education of their child. These expenses can include living expenses, books, travel expenses etc. But before taking these loans for financing these purposes you should keep in mind that there has been no previous financial aid taken for these purpose. With these loans you can have the advantage of tax deduction on the interests that you pay towards the loan.

College loans can cause a lot of confusion for parents due to the fact that there is not much information available on the loan programs. Because of the ignorance at time the parents end up with the wrong type of loan. There are times when parents use credit cards to pay off some of the bills for their children without realizing the fact that they would have to pay a high interest rate. Also there are times that parents refinance their house or use other sources of finance that can be really expensive. Such people often are unaware of the federal loan program that can help them save a lot of money that they spend paying the interest the principal of the expensive loan.

Getting a federal loan is a better option any time as compared to the refinance mortgages or the credit cards. This is attributed to the fact that the interest rates on these federal loans are much lower as compared to the interest rates offered by the refinance mortgage or any other source of loan. Besides the interest rates being low there is no application fees and no processing charges for the loan. Moreover you can also have the benefit of tax deductions on the interest rate that you pay towards the loan.

With the Federal Plus Loans the parents can borrow enough funds for financing their childs education. In case they have used any other type of financial aid then they would be eligible for a loan amount that is equivalent to the total cost of the education after subtracting the aid that has already been taken by the borrower. The interest rates on these loans would change on the 1st of July every year.

The PLUS loans are the most preferred loans and moreover they are easily available. PLUS loans stand for Parent Loans for Undergraduate Students. These loans unlike the other student loans are borrowed by the parents rather than being available to the students. The parents are eligible to borrow much more with these loans. The amount that is available with the PLUS loans is enough to cover the educational expenses. But with these loans there is no grace period for repayment of the loan. The repayment period starts immediately. With the PLUS loans the parents do not act as co-signers and are solely responsible to pay back the loan.

In case the parent defaults on the PLUS loans the result is shown on the credit report. The loans can ideally be paid off within one to four years. It is advised that they take a four-year repayment plan so that paying back the loan becomes easy and it is paid off on time. With the new amendment in the PLUS loans now even graduate students can get these loans. The interest rates and the terms however would remain the same even for students.

The PLUS loans are not based on the need hence they can be they can be taken by any parent whose child aspires to get higher education. The amount of loan that can be taken would meet all the educational cost. These loans are insured federally and do not require any collateral for taking the loan. Besides the most advantageous thing is that the interest that is paid on these loans is tax deductible. If the parent decides to pay off the loan before the term of the loan is over then there are no pre payment penalties. The PLUS loans are directly available from the Department of Education or with the help of educational loan brokers. But while taking a PLUS loan it is advised that you go directly because going through a broker can bring in a lot of additional costs. When you apply for a Federal PLUS Loan the information that you provide is thoroughly checked and scrutinized. Getting a federal loan can solve a lot of problems that a family can face in case they take a high cost loan from other sources.

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