The Truth About Govermnent Student Loans

Most would agree that the best step that any child can make after their high school is to further their education by going to college. The problem is that the cost of higher education is increasing every year along with living expenses associated with it. This means that fewer people are able to afford keeping their children or indeed themselves in institutes of higher learning without some measure of financial help. This is where either government or private student loans come in to help out.

Student loans come in many different size and flavors ranging from a little financial help to off-set the cost of college or a full 4 year to fund their whole college experience. Many lender offer student loan packages that are very attractive which students and even parents can seriously consider in order to ease the financial burden of college education. The government also offers similar packages which can also be considered when deciding on the final package to take up. Here we will help you look at the government student loan option in further detail.

The first place that students or parents should is to the U.S Department of Education as they provide government student loan packages that are cheaper than any other private student loan option. The only problem is that there are very strict restrictions applied to the application process which makes getting a loan from the U.S. Department of Education harder and more complicated than getting the loan from a private student loan provider. The first hurdle that must be passed is that the student must show a need for assistance, be an American citizen or a qualified non-citizen. Applicants must have registered between the ages of 18-25 for normal circumstance loans and must also be working towards a certificate, diploma or degree in an eligible program and must also make satisfactory grades to be even considered. Most of the time these high barriers make it impossible for people to join which means they have to resort to other commercial student loan lenders.

Another problem with federal education assistance programs is that the loans are issued based on the students “need of assistance”.  This is because every year there are possibly thousands of applicants with only hundreds of loans that can be given out. Only the students which are deemed to be the most “needy” will receive their loans. Others must find difference avenues to finance their studies thus most turn to private lenders which aren’t as strict when it comes to how “needy” the student is.

The most common sort of government student loan that used by students is the Stafford Loan. The full name is the FFEL Subsidized Stafford Loan and is rewarded according to the “need” of the individual student as mentioned earlier. There is another type, namely the FFEL unsubsidized Stafford Loan which doesn’t require the student to show sufficient levels of “neediness” however is not particularly good because the student is required to pay the interest through the life of the loan, meaning paying for the interest during their education years. The last types of loan is the direct Stafford loan which is issued directly from the Department of Education but is rarely done or used because of the unnecessary levels of red tape associated with this type of loan.

Another type of government loan that is frequently used is the Federal Perkins loan which is available at most colleges and is paid back to the college. Unfortunately these loans are also based on need and less than 50% of those who apply would be accepted of the loan. Generally these loans offer good repayment periods and rates however applying for them and actually being accepted is rather difficult.

If you as the student have tried but failed to obtain student loans then it many be time to try commercial lenders. Although they are admittedly more expensive than government loans the chances of being accepted is much better. The choice should you be turned down should not be whether you can get further education but rather which other commercial lender can give me good rates.