Federal Student Loan Tips

There are not many high school graduates in the enviable position to be able to pay for their college tuition outright. Student loans are usually what new college students get to pay for their education.

Federal student loans are the most widely used student loans today. There are different types of federal loans that exist for students. Subsidized and unsubsidized loans are the two most commonly used.

Students that have a valid financial need (per regulations of the Federal Government) would get a subsidized loan. While the student is in school, part time or full, or in a grace period or deferment period, no interest has to be paid.

Unsubsidized loans do not depend on the financial need of the student. Interest is charged with this loan. Unlike subsidized, interest is accruing while the student is in school, and during grace and deferment periods.

A form of unsubsidized loan is a PLUS loan. These are loans that parents get and they have dependents that are college students. PLUS loans are also used for professional and graduate students. Education expenses are paid for by federal student loans. Interest is accrued throughout during this time.

You can expect an easy application and approval process. Students have to fill out a FAFSA (Free Application for Federal Student Aid). Online submission has really streamlined the process.

The student application deadline is June 30 of every year. Current tax information from parents who have dependent students will have to be submitted. Students have to submit their own tax information if they have flown their parent’s coop.

With low interest, you will find the monthly payments very reasonable. After you have been away from college for about nine months, repayment will begin. Federal student loans must be paid back.

After you get out of college, and if you are not employed you can get an extension for a certain period of time. Failure to pay back these loans can get the borrower in trouble. Since they are federal student loans, the Federal Government can impose a number of penalties.

Some of these penalties include withholding tax refunds, garnishing wages, and even litigation. If you are thinking about filing bankruptcy, you should know that the Federal Government does not allow student loans to be included in a bankruptcy.

Students will find that federal student loans are some of the best for students to have. Each student’s financial need can be met by choosing the right student loan.

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