Government Student Loans

Government Student Loans
By Student Loans.Net

Government student loans are the leading way students pay for their post-secondary education. The U.S. Department of Education sponsors an array of loan programs for both parents and students based both on financial need and credit (depending on the program). All government student loans require the student to fill out and submit a Free Application For Federal Student Aid. This can be done via the Internet or mail. Once the application is processed, a Student Aid Report (SAR) is generated. The school financial aid administrator uses the SAR to calculate an aid package for the student. Specific details on government student loans and grants can be found by visiting www.StudentAid.ed.gov. In the meantime, here is a quick breakdown of loan programs offered through the program.

Federal Stafford Loan
A Federal Stafford Loan can be used to pay for direct educational costs that are not covered by already awarded grants and scholarships. To be eligible for a Stafford loan, the borrower has to be enrolled at least part time. Repayment of the loan begins six months after the student graduates or leaves college. In certain cases, during times of hardship, the loan can be deferred longer then that.

There are two types of Stafford Loans. Subsidized loans are awarded dependent on financial need. Students who attended classes at least part time are not charged interest while they are enrolled in classes. Interest is also not accrued during grace periods and deferment periods. Unsubsidized loans are a bit different. While these loans feature the same low-interest rates as subsidized funding, the funds are subject to interest accrual at all stages of the loan’s term.

Federal PLUS Loans
Parents and graduate students can take advantage of the Federal PLUS Loan program. Awarded based on credit, the PLUS loan also has a low interest rate. The main difference from the Stafford Loans is PLUS borrowers must pass a credit check. For parent borrowers, repayment of the loan begins no later than 60 days after release of funds.