Advantages Of Loans Federal

Advantages of federal loans

Introduction

Federal loans are the loans that are offered by the US government to help the needy students and to help the student have a better stay at school. These loans are directly from the colleges and universities which get the money from the federal government. Almost all students are eligible for the federal loans as they do not ask for the credit report and other requirements that the private lenders ask for. The federal loans offer attractive packages to their borrowers and the best part is that their interest rates are lower and fixed.

Types of federal loans

There are four main types of federal loans that are open to the US citizens.

1. Federal Stafford loans: this is a student's loan that is offered to the eligible students that are enrolled in the American universities and colleges. It is a low interest rate loan and the students must fill a free application federal student aid form when they are in the colleges and universities or while waiting to join.
2. Federal Perkins loan: this loan is offered to the needy students and is meant for paying for their education. This loan has lower interest rates than other federal loans, have a fixed interest rate of around 5% which in most cases start to count when the borrower starts to make the payments and are given by the government.
3. Federal graduate plus loans: this loan is used by the graduates to supplement the other loans and financial aid. This loan requires the filling of the FAFSA form, has no aggregate maximum, has multiple repayment options, has no grace period and has a fixed interest rate.
4. Federal consolidation loans: this loan is used to consolidate all the loans that an individual may be having into one loan so as to attain lower interest rates and reduced monthly payments.

Advantages of federal loans

The following are the factors that make the federal loans the best as compared to the private loans.

• Federal loans have fixed interest rates meaning that the payments will never increase and the borrower is able to plan for their future in a much better way.
• The federal loans are insured by the government thus, if a borrower is disabled or killed, the loan is cancelled.
• Federal loans allow the borrower to choose a repayment plan that is favorable for them.
• It is very possible to consolidate the federal loans making it easier for the borrower to make the repayments.
• A federal loan borrower can avoid delinquency by entering into a deferment due to some genuine reason like unemployment or re-enrollment to school.
• Students with federal loans are usually given a grace period of about six to twelve months after they graduate.
  
  

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