Federal Student Loan
A Federal Student Loan Provides Funding For College
Not all students have the money to pay for their higher education, resulting in the need for loans and grants to pay the tuition, living expenses and associated costs.
Some take out a federal student loan or two, or three in order to make ends meet while they pay for their education. One of the advantages of a such student loan is the interest rate is fixed by the government. While many of the loans are handled by traditional lenders, this loan is guaranteed by the government.
The lower interest rate makes them attractive alternatives to other educational funding choices and the fact they are guaranteed by the government often makes them available to students who may otherwise not qualify for a loan.
A good thing about this type of loan is that payments on the loan are usually deferred until six months after graduation. Any interest charges, on a subsidized loan, will be paid by the government until the end of the deferred period.
Any money the student pays on the loan during the deferment period will be applied to the principal reducing the overall amount due on the loan. At the end of the deferment period, the student will be responsible to make the full payment, including interest.
For non-subsidized loans, interest will begin to accrue immediately upon graduation, added to the total amount of the loan.
Portions Of This Type of Student Loan May Be Forgiven
The government is all about helping recent college grads with their student loan and there are numerous ways in which a portion of the loans can be forgiven.
By volunteering with some organization such as the Peace Corps or VISTA can erase part of the loan balance for every year the graduate volunteers with any of the agencies.
There are some programs aimed at new teachers that teach in certain locations where a portion of the loan is forgiven based on the time they serve in those schools.
For most, a five year stint at one of the schools can erase about 85 percent of the loan debt.
It is possible that providing free legal and medical services in certain areas of the country will result in forgiveness of part or all of the student loan. Checking out all of the possibilities can help reduce the overall amount of debt, if qualified, and help get the federal student loan paid off much faster.
Federal Student Loan