Federal Student Loans: Fast Facts on Federal Aid

Want to go back to school but you're afraid of how you're going to make ends meet? Federal student loans give you the freedom you need to study without taking on a second or third job to pay for your educational expenses.

Loans can offer you a little more breathing room in your financial aid package, but federal financial aid can be your best bet for a range of reasons. Here are some fast facts about federal financial aid loans.

Federal Aid Perks Come in Handy

Federal student loans come with a few perks not available with many private loans. Check out a few of the perks of federal financial aid:

• Grace periods: After you graduate, change your student enrollment status, or otherwise leave school, federal loans give you a chance to catch your breath before you have to begin repayment. Stafford Loans come with a six-month grace period, while Perkins Loans feature a nine-month window.
• Reasonable rates: Federal student loans typically have lower interest rates than private loans. Subsidized Stafford Loans can offer you a great deal, depending on whether you qualify for need-based aid.
• Flexible repayment: Income-based repayment plans, loan deferment and forgiveness options, and low fixed interest rates are just a few ways the federal government makes the repayment process easier for you.

Your Personalized Financial Aid Plan

Depending on your income and other factors, you may qualify for subsidized or unsubsidized loans. Undergraduate student loan limits range from $3,500 to $12,500 per year in federal loans. Here are the general options for student loans:

• Subsidized Stafford Loans: These loans are available for students with the greatest financial need. Interest is subsidized while you're in school, meaning the federal government pays the interest while you are in school and during grace periods.
• Unsubsidized Stafford Loans: Low interest rates and flexible repayment plans highlight these loans. Interest accrues while you're in school, but you can pay it while you're in school or defer it. However, if you defer the interest, it is added to the principal and also accrues interest (capitalized).
• PLUS Loans: Your parents can borrow these low-interest loans to help fund your education. Unlike Stafford Loans, these require a credit check and don't come with a grace period.
• Consolidation Loans: If you already have multiple student loan payments, you may be able to roll them up into a consolidation loan, with one loan with one monthly payment.

Financial Aid Application Procedure

Ready to get started? Fill out a Free Application for Federal Student Aid (FAFSA) online. You need to re-apply every year you're in school to determine your eligibility for loans.

About the Author
Amelia Gray is a teacher and freelance writer in San Marcos, TX. Amelia earned a Bachelor's Degree in English Literature from Arizona State University.