Before applying for loan program, you should understand all the terms and conditions of the loan. Federal student loan was introduced in 1958 by US Treasury. You can get your student loan from either Federal government student loan program or from private institutions to finance your educational expenses. In Federal student loan programs, the government guaranteeing your loan and you don’t need to provide a co-signer. You can also get federal student loan with a lower interest rate on amount that you borrowed. Payment options are also flexible too in federal loan. In private student loan programs, they require a co-signer for your loan because in Private student loan, the government doesn’t guaranteeing your loan and they charge a high interest rate on amount that you borrowed. Even there is no option to postpone your payments of loan in private student loan program.
What types of federal student loans are available?
In Federal student loan program, the U.S Department of Education is your lender. There are four types of Direct Loans available.
- Direct Subsidized Loans – This loan was introduced to help the undergraduate students who are getting trouble in financing their educational expenses and need some external sources to cover their costs.
- Direct Unsubsidized Loans – This loan was introduced to help the graduate and professional students who completed their educational degree. To get eligible for this direct unsubsidized loan, the student does not have to demonstrate financial need to be eligible for the loan.
- Direct PLUS Loans – This loan was introduced to support the graduate and parents of undergraduate students who are getting trouble financing their educational expenses and need some external sources to cover their costs.
- Direct Consolidation Loans – This loan was introduces to combine all eligible federal student loans into a single loan.
Limit to borrow in Federal Student Loans
Limit to borrow in Federal student loan program depends on your current status. Whether you’re an undergraduate student, or you completed your educational degree or a parent of graduate student.
- If you are undergraduate student, you can borrow upto $5,500 or $12,500 yearly.
- If you are a graduate or professional student, you can borrow up to $20,500 yearly.
- If you are a parent of a dependent undergraduate student, you can receive a Direct Plus Loan program for the remainder to finance your child’s educational expenses.
- Before applying for federal student loan program, make sure that you understand all the legal obligations and terms of the loan program. Because if you get approval for your loan, you will be responsible for repaying with interest.
- Before applying for a loan, keep track of how much you’re borrowing because you will be responsible to pay back the payment. Usually, you’ll have to pay monthly for your loan . After graduation, you student loan payments should be a small percentage of your monthly income. So always borrow the amount that exactly what you need for your educational expenses.
- Get a quick research on how much you can earn after completion of your graduation. To estimate your salary after graduation, you can use U.S. Department of Labor’s Occupational Outlook Handbook for this purpose.
- Make sure that you understand all the terms of using loan program and you keep all copies record of your loan documents that you borrowed.
- Make sure that your montly loan payments are not default because your default loan history is stored in your credit history. So make sure that you have enough saving to pay your monthly loan payments as per loan policy.