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Government Student Loans – Programs to Use & Overview

August 29, 2011

Government Student Loans

There are multiple government student loans that you can use that will enable you to be able to attend college and better yet afford college. These loans are federal loans which should be your first choice when it comes to looking for loans before you inquire about private loans, just because you will find that interest is going to be a lot lower with federal options, as well as many of them being non credit based, meaning they really could care less what you credit score is, and it doesn’t factor into your qualification. There are 4 different government student loans that are available to you, those being; The Stafford Loan, The Parent PLUS Loan, The Perkins Loan & The Graduate PLUS Loan. These will be discussed in the next section as well as the pros and cons when it comes to government student loans.

Government Student Loans

Government Student Loans – The Different Options

  1. The Stafford Loan – This government student loans program offers you a fixed interest rate meaning that it will never change and can be found as low as 3.4 percent, it ranges from the borrowing limits for first years getting up to 5500 dollars to graduate students getting up to 20,500 dollars as the loan limit increases each year, you don not have to make payments on your loan debt while you are in school and you do not have to have a good credit score to qualify for Stafford government student loans.
  2. The Parent PLUS Loan – This loan is for parents who are looking to pay for the education of their children where the funds will be sent to the school in which their child is enrolled at. These government student loans offer a fixed interest rate at 7.9 percent, you can borrow up to whatever your other financial aid resources aren’t covering, deferment options, a 10 year repayment period and you can get 0.25 percent off your interest rate by choosing to have your funds automatically deducted from your account.
  3. The Perkins Loan – You will find the interest with these government student loans to be at a rate of 5 percent. You do not have to pay back your student loan until 9 months after graduation if you are enrolled half time or more, 10 years to repay your debt, deferment options and the possiblility of having your payments be considered tax deductable and lastly you will not be charged an activation fee, or in other words there is no service charge.
  4. THe Graduate PLUS Loan – Graduate loans come with an interest that is at a fixed 7.9 percent. These government student loans offer you many of the same benefits of the Parent PLUS program and requires that you either have good credit or supply a co signer who has worthy enough credit for you to qualify.

Government Student Loans – Pros and Cons

PROS

  • Most of them offer you the chance to get a loan and not have to have a good credit score in order to qualify.
  • You get a 6 to 9 month grace period with government student loans where you can focus on getting a job before you have to start paying loans.
  • Interest rates are significantly lower than you would find in private student loan programs.
  • Student loan forgiveness is always available to you through governemtn student loans programs.

CONS

  • With lower levels of schooling, government student loans have borrowing limits that are a lot lower than what you would need in order to be able to afford a years tuition and other schooling costs.
  • You need to apply for the loan each year meaning that you will have to pay each one off seperately
  • More often than not, government student loan funds will be given to you by your school, taking the way the freedom of having access to the money at all times, meaining whenever you need funds you will have to go through your school.