Federal Loans For College
Federal loans for college include a wide array of financial aid programs meant for students who need money to pursue higher education. These programs are funded by the government to help the needy students enroll in college programs regardless of their limited financial resources. These loan programs have a low rate of interest and flexible repayment options.
Federal College Loans for Students vs. Private Student Loans
Federal loans for college have a fixed rate of interest while private student loans have a variable interest rate. Federal student loans are granted to students on the basis of need. Private student loans, on the other hand, are based on credit score.
Types of College Federal Loans
Federal loans college include federal Stafford loans, Perkins loans as well as Plus loans.
- Federal Stafford Loans: These loans can either be subsidized or these may be unsubsidized. In case of subsidized loans, the government pays the interest on the loan while a borrower is enrolled in a program while in subsidized loans, students have to pay the interest by themselves. These loans are granted to the students on the basis of financial need. Students must be at least half-time enrolled in a program to avail these loans. The interest rate of unsubsidized and subsidized loans is 6.8% and 3.4% respectively. Borrowers can start repaying the borrowed amount 6 months after graduation in these types of federal loans for college.
- Federal Perkins Loans: These are another popular type of federal loan. The interest rate of these federal loans for college is fixed 5%. Students who demonstrate extreme financial need can benefit from the Perkins loans. They can start repaying the borrowed money 9 months after graduating.
- Plus Loans: These loans are also federal student loans for college meant for the parents of the students who want to enroll in college programs. With the help of these financial aids parents can support their children financially and enable them to pursue their educational and professional dreams. These loans are not granted on need basis but credit check.