Loans by the federal government are popular ways to finance your teaching if you would like to receive sufficient funding with incredibly low interest rates. The loans are offered through Federal Direct Loan Program.
It’s critical to note that before July 2010 there was also FELP (Family Education Loan Program). The practice how this program worked is easy, third-party lenders (e.g. Sallie Mae) offered federal student loans for eligible borrowers using funding by the government.
At present this loan education program is unavailable and was eliminated by the government. Federal loans are now offered by the Department of Education directly. It means that no private lenders are participated in the funding process.
Federal student loans are offered for a range of borrowers in quite a few types. The loans are presented in quite a few types: PLUS, Perkins and Stafford. All these loans have individual benefits and disadvantages too.
Perkins loans are created for college students with financial need. Student who have need can qualify for these loans. Financial need and low income don’t allow them to attend college they want. So, it’s the chance to apply for Perkins loans and qualify. There are a lot of students who qualify but the amount of total available funding is strictly limited. Application process always starts by submitting the FAFSA form. The most well-liked method is submitting the form using the Internet.
Stafford loans are very famous and almost all college students agree that these loans are the best out of all. People are really happy with this loan as it’s designed for wide range of borrowers. There are 2 subtypes:: Subsidized and unsubsidized.
The subsidized categories of this loan is for students with financial need. This category of loan is similar with Perkins loans. The distinction is that Perkins loans are for college students with significant financial need. But the word “subsidized” the government means that it pays the interest for a borrower. Therefore, a borrower owes only the core sum he must pay back. In other words, there is no interest paying involved.
Unsubsidized Stafford loans are presented for student despite financial need and almost every college students qualify. On the other hand the government does not “subsidize” this loan by paying the interest. In this case, a student has to pay the loan plus the interest that can accrue.
PLUS loans are available for graduate students and parents of dependent students. These loan are credit-based and not dealing with financial need. It’s necessary to have good credit score. This form of federal student aid is dealing with credit-based criteria. It means that a borrower must have good credit history or a credit worthy cosigner. A student could not qualify if he doesn’t meet requirements. This type of federal loans is not cared about financial need of borrowers. It doesn’t if a borrower has low-income or financial troubles. Only a borrower is responsible for it. Accordingly, a few risk involved.