Like you, many Americans dream of earning a college degree. The sad thing is that tuition fees are sharply rising. Unless you are a star athlete, extremely intelligent, or got really rich parents, the only way that you can earn a college degree is to get approved for a student loan.
Types of Student Loans
There are generally two kinds of student loans that you can look into to help you with all the expenses that come with earning that all-important college degree.
The first kind is what is called a private student loan. This type of loans are offered by banks, credit unions, schools and other private lenders.
The second type of student loan that you can apply for is what is called a Federal Student Aid or more commonly known simply as a Federal student loan. As its name implies, this particular kind of student loan is offered by the government, specifically the U.S. Department of Education as its way of providing aid to Americans that wish to earn a college degree, but just simply couldn’t afford the hefty and ever-rising tuition fee costs.
Why Get a Federal Student Loan?
Although applying for a private student loan may initially appear to be more convenient, opting to apply first for a federal student loan can actually be more advantageous for you in the long run.
Easier application requirements to meet
The irony of applying for a private student loan is that credit scores and standings are important factors that are taken into consideration as to whether you get approved or not. This can be a huge setback for you, especially if you are planning to apply for a student loan to go back to school after financial problems forced you to stop.
In the case of federal student loans, the government presumes that the reason why you’re applying for a student loan is that you are financially strapped. As such, they have made the requirements much easier for you to fulfill.
Fixed interest rates
Federal student loans don’t only have some of the lowest interest rates charged. They are also fixed. That means you do not have to worry about the possibility that the interest rate you’re paying on your student loan will steadily increase to the point that it becomes extremely difficult for you to make your payments.
Payment starts after graduation
One of the biggest challenges faced by students that took out loans from privately owned institutions is that they would need to start repaying the student loan taken out even if they are still in school.
Students who took out a federal student loan, on the other hand, don’t have to worry about paying back their loan until after they graduate. Because of this, they are more able to focus on their studies and get better grades which would, in turn, increase their chances of landing better jobs after they graduate so paying back the loan is so much easier.
Extremely flexible payment plans
In an ideal world, you land a really good job after graduating so there would be no problem at all when it comes to paying back your student loan.
But we all well know that doesn’t always happen. In fact, in today’s economic situation, it’s more likely that it will take some time before you can land a good paying job that will provide you the funds to pay back your loan. For this reason, the government has placed provisions on federal student loans that will allow you to request for your loan repayments can be lowered or even postponed for a certain period; so you don’t need to worry about defaulting on your student loan.
The government will be there to help you
Perhaps the biggest challenge you will face after taking out a private student loan is that you’re pretty much on your own. You will not really have anyone to help you out either when it comes to applying for your student loan or paying for it. In the event you fall behind, there are dire consequences to it.
That is not the case with federal student loans. From applying for the loan up to when you start making loan repayments, the government will be there to help you through the process.
If you want to apply for a federal student loan, you can visit the Financial Student Aid website of the U.S. Department of Education.