Guide to Federal Student Loans
Studies conducted on student loans disclosed the fact that 20% of undergraduate students who have taken educational loans have not bothered to see if they are qualified to get federal loans. This fact was noted to be the result of massive marketing campaigns of private loan lenders.
Advertisements on TV and on the internet of private loans with low interest rates and loan proceeds that can be released in a week have enticed students thus, instead of taking federal student loan many students have opted for private loans.
What is federal student loan and why would it be beneficial to consider this type of loan first? Basically, a federal student loan is intended to pay for school expenses which include tuition fees, books and school supplies, room and board, transportation expenses as well as technology need like computers. Federal student loans are financial aid given to students to supplement study grants and scholarships.
A federal student loan can be subsidized or unsubsidized. In a subsidized loan the student only has to pay the principal amount given that the government pays the interest. This type of loan though is only given to students with low family income. Unsubsidized federal student loans on the other hand, are only guaranteed by the government. The student will have to pay the principal plus the interest rates.
Aside from the lower interest rates, a student will get more benefits from taking federal student loans instead of private student loans. Government loans do not require a cosigner. As these loans are non-credit based, low credit score or poor credit history won't matter. This is not so with private student loans. Low credit score would mean disapproval of the loan. Moreover, student borrowers who have public service related jobs for 10 years may have the loan balance forgiven.
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