Federal student loans – also called federal student loans – are the go-to choice for borrowers to borrow money for school. After scholarships and grants, government student loans are probably the second most common choice to pay for school. They are usually less expensive and more supportive than private student loans. There is a wide range of government student loans available, so it pays to shop around. Private student loan lenders charge interest that is often higher than government loan lenders, so you will want to compare your rates as well. You could get more money by taking out a government loan versus a private loan.

government student loans

Federal loans are made by the United States government. The Department of Education offers these loans through the Federal Family Education Loan (or FFEL) Program. There are also other government student loans available; however, these tend to have less stringent requirements than the FFEL program. To qualify for one of these low interest loans you need to meet specific income and credit requirements.

When applying for federal student loans you need to meet specific income requirements. This means you must be able to prove your current income and your cosigner’s income as well. Credit verification is necessary for both private and federal student loans, so if you have poor credit or no credit at all you may want to consider getting a co-signer to help secure the loan.

One type of government student loans that is available to US citizens is the federal direct consolidation loan. A federal direct consolidation loan is a consolidation of private and federal loans into one lower interest rate loan. While you will pay a higher interest rate for the first few years of the loan, this is usually offset by the lower monthly payment. This type of loan is great for students as it allows them to pay back the debt with one payment.

A second type of government student loans available to US citizens that can help finance their college education are the Perkins loan program. This program offers assistance to those who are considered the college bound student. The government considers students who are not in good enough standing to qualify for the Direct Loan program and who have experienced a dip in their credit rating. For those students a Perkins loan program may offer a solution for the immediate repayment of the loan.

Direct loans are made directly to the borrower. There is no government involvement in the process and the money does not have to be repaid. Direct federal student loans can be offered by private lenders as well. The only difference is that borrowers will pay an interest rate that is significantly lower than what they would pay if they were going through the direct consolidation loan program. As well, the government does not subsidize any of the interest rate so borrowers do not have to worry about having excessive payments made for the privilege of getting a lower interest rate on their federal student loans.

Private student loan programs are not always bad news though. If you have less than stellar credit or you just do not want to deal with interest rates loans from private lenders might be your best option. However, private lender rates will most likely be more expensive than what you would pay through the federal government student loans program. This is because the private lenders do not have to worry about government intervention. They charge higher interest rates because they will be taking on more risk, as all student loan debt is backed up by the federal government.

You will need to make some choices when choosing the right repayment plan for your student loan debt. While there are many advantages to federal plus loans over the private loans and there are also disadvantages to private lenders. You will need to consider the fact that a government loan is guaranteed and you will not have to worry about private lenders raising interest rates to make up for the government intervention. Furthermore, you will want to make sure that you are getting a fixed-rate loan. Federal student loan programs will not change over the life of the loan, while private lenders can re-rate you as often as they like as long as they can get the money.