Student Aid: Federal Loans For Students

There are millions of students who are eager to attend school

, college or university but do not have financial opportunity. If you are facing such obstacles it's time to think about your future and consider federal or private student aid options like loans.

A student can find three variations of student aid available today: loans (federal or private), scholarships and grants. Each options has advantages and disadvantages and for this reason it's important to know everything about student aid.

Low-income loans

There is a trend that education loans are becoming the number one form of loans by popularity in the United States. Many people are trying to gather more advices on this topic by talking with other students, looking for magazines and journals and more.

Depending on lenders, there are two forms of loans: federal low-income loans and non-federal loans. Federal loans are low-interest loans based on financial need (in most cases) that are provided directly from the U.S. Department of Education under Direct Loan Program.

Federal loans are:

- The Federal Stafford loan

- The Perkins loan

- The Federal PLUS loan

The each type can be considered as unique for certain features offered for borrowers. As an example, the Federal Perkins loan is only for student s who have very low-income level and demonstrate high financial need. For this type of aid, income-level plays the important role because it allows defining financial need. Its important to notice that the amount of students awarded is limited. For PLUS loans, undergraduates are not eligible for funding because this type of loan is for parents and graduates. There are two forms of Federal Stafford loans: subsidized and unsubsidized.

There are non-federal (private) loans by financial banks like Citi. These loan products are provided by various banks offering flexible ways for school funding. Because private loans are credit based, lenders will require a good credit score plus high-income level to guarantee repaying. Being able to repay the loan is imperative step. It lies on the desire to have guarantee of repaying.

Pros of Federal Loans

Federal loans have huge benefits in comparison with private education loans. First, you can apply for this type of aid with low-income level and have low rates. In fact, they are cheapest loans available for students today. The interest rates vary from 5% to 7% per year. In comparison with loans by private lenders federal loans are really low-interest loans. This benefit is very important because reflect the total amount you owe. This benefit must be the first.

Federal government is focused on social policy that includes effective financing and making it more inexpensive. Because of this, if a borrower thinks about getting student loans the number one step is to apply for federal aid options. Its the best recommendation.

Alternative loans can not be considered as perfect loans. In fact they are more pricey. However the key benefit is that private lenders do offer more advantageous features for borrowers. They have an assortment of types of student loans for certain types of lenders, offer a choice of repayment plans and extra services like consulting.

Today there are a lot of private institutions focusing on providing most excellent options for students who want to borrow money. For this reason, each lender does all the best to offer the top services. Its good for borrowers because they have great choice. Until the end of time analyze all available private loans and read terms and conditions of each one before applying.

In spite of this both federal and private loans have the main difficulty - they must be repaid. This type of aid is offered for scholars but they must give it back. In this situation, college grants and scholarships are much more appealing. They must not be repaid. Students receive it for free.

by: Milana Grade

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