Student loans are a valuable resource to pay for a college education. They have no doubt been a great help to the majority of college students who are unable to afford the tuition by themselves.
A federal student loan is one that is lent by the government. To get federal student loans and grants, you will have to fill out a Free Application for Federal Student Aid or FAFSA, so your financial eligibility can be considered by the appropriate agency.
A federal student loan allows the government to make an investment so that the population can gain further education and contribute to the economy by becoming more productive workers. A federal student loan can offer many benefits to low income families.
However, just like other types of loans, a federal student loan does have to be paid back. Your monthly payments will include the principle and any interest charges levied on your balance. If you are late in payments, it will show up on your credit report and lead to a poor credit score.
There are different types of federal student loans. Stafford and Perkins are popular types of federal student loans. Subsidized federal student loans offer delayed interest accumulation. For example you may not have to pay back while you are in school and for a grace period after graduation of around 6 months. After that the interest will start accumulating.
Many types of federal student loans are need based so that low income families can be helped. The ones that are not need based may require a credit check of the student’s parents to make sure that the money can be paid back.
It is important to consider the amount of loans you take out and whether you will be able to repay them. Taking out excess loans can lead you to default on your debts and mess up your financial situation just when you are about to begin your career.
If you are unable to meet your loan obligations, you can try loan consolidation to reduce your monthly payments. This allows you to cover all your student debt with one low interest loan, thereby reducing your monthly payments. It is important to meet federal student loan repayment obligations as they come due to avoid spoiling your credit history.