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Study loans are offered by the government either directly or by guaranteeing loans offered by private lending institutions to students for financing their education. Offering maximum benefits these loans are better than any other source of finance, especially the private student loans offered at very high rates of interest.
Types of Federal School Government Loans
Federal School Government Loans are of two types they are FDLP and FFELP.
Federal Direct Loan Program (FDLP): The US department of Education offers the following loans directly to students.
- Direct PLUS Consolidation Loan – This loan program consolidates both FFEL PLUS and Direct PLUS loans for the benefit of students.
- Direct Consolidation Loan (Subsidized) – Students are eligible for interest subsidy on such loans. FFEL, Federal direct loans and Federal Perkins loan can be consolidation together without any hassle.
- Direct Consolidation Loan (Unsubsidized) – Those Federal student loan programs that do not qualify for subsidy on interest are eligible for consolidation under this scheme of consolidation loans.
Federal Family Education Loan (FFEL) program: One of the most beneficial student loan programs, these loans are normally offered by private lending institutions, guaranteed and reinsured by the government on behalf of the students who avail the loan. There are different kinds of FFEL programs listed for your reference.
- Stafford Student Loans (Subsidized) – After spending atleast half the time in the school of your choice you can apply for Stafford subsidized student loan. It is called a subsidized loan program as the interest portion of the loan is borne by the Federal Government for the benefit of students and thereby helping reduce their loan liability.
- Stafford Student Loans (Unsubsidized) – A loan program which requires the student to pay the interest portion soon after the loan is availed, while the principal repayment begins after completing school. These loans are normally offered to those with maximum borrowing capacity.
- Federal Perkins Loans – These low interest loans are offered to needy students helping them finance their post secondary education at a lower cost
- Student PLUS Loans – These loans are offered to the parents of children who require funding. This way parents bear the cost of their children’s education.
Benefits of Federal School Governments Loans
- Offers loans at lower interest rates.
- Interest cost is borne by the government under specified loan schemes
- Repayment begins after school ends
- Easy, flexible and longer repayment term
- Credit score requirements are flexible.
These sources of loans are the most preferred destinations of financing college education.
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