Benefits of Federal Loans
Federal student loans remain a popular option because they’re friendlier to borrowers than many private lenders.
We’ve already discussed the more favorable interest rates and stability they offer, but government loans include many protections that help borrowers if they are unable to repay their loans for any reason.
These range from repayment programs to completely canceling debt. It’s important to remember, though, that these programs sometimes have stringent qualification requirements. Here are some of the biggest benefits federal student loans offer:
1- Income-Driven Repayment Plans
If you’re paying too much in loan repayments relative to your annual income, you may qualify for an income-driven repayment plan. These programs cap the maximum amount you can repay per month at a fixed percentage of your income (ranging from 10% to 20%) and give you a longer repayment term to ease your financial burden.
2- Deferment and Forbearance
Sometimes you may fall into some hardship or situation that precludes you from paying your loans. In these cases, federal loans many times offer deferment and forbearance protections.
Deferment lets you delay your payments for a set period if you’re facing financial hardship or if you’re enrolled in school at least half-time, and you don’t accrue interest on some federal loans.
Forbearance lets you suspend payments temporarily but is reserved exclusively for when you’re facing financial hardships. Loans in forbearance usually still accrue interest, so it’s often good to avoid the process as much as possible.
>> More info on which way to go: Deferment or Forbearance?
3-Student Loan Forgiveness Programs
In some cases, you may have difficulty paying off the full sum of your outstanding debt or may simply qualify to have part of your loan erased. It’s important to remember that forgiveness isn’t always reserved for hardship, and you may qualify for a variety of reasons.
Some programs reduce your loan balance as a reward for public service or working with underserved and needy populations. Others offer it as an incentive for long periods of responsible repayment. Overall, however, you can effectively avoid paying part of your loan if you qualify for the many time's stringent programs.
4-Student Loan Discharge Programs
As with forgiveness programs, there are a few alternatives that let you cancel the remainder of your loan with fewer restrictions on the amount, though they’re rarer. These programs involve unique scenarios, such as a permanent disability or death.
If you are born with a disability or become disabled, you may qualify for a total and permanent disability discharge, which is granted if you can prove your injury.
If you pass away, your debt is usually discharged when valid documentation of your death is presented. You can also have your loan discharged if the school you attend closes before you complete your degree, though there are some limitations.
Benefit Comparison Federal VS Private Student Loans
Conclusion
A college education is a valuable endeavor and finding a way to pay for it should never be a burden. Federal student loans give you a friendlier and more secure way to borrow the funds you need for your education, and easier ways to pay it back.
Additionally, you can find programs that are more tailored to your desired career path, and which reward you for being responsible prompt with your payments. With fixed rates and the backing of the federal government, these student loans should always be at the top of your options list when you look for financial aid to pay for your university degree.
Federal Student Loans FAQs
How do I Log In?
To log in to fill your FAFSA form and check on the status of your existing loans, you’ll first need to create an account.
1. Visit Studentaid.Gov
2. Create your FSA (Federal Student Aid) ID by following the steps on the website
3. Answer the forms and provide the requested verification after you’ve completed them
>> More information on Studentaid.gov
How can I view my federal student loans?
Once you’ve created your account, fill out a FAFSA form, and been approved for your loan, all your information will be available on StudentLoans.Gov. To see information about loan approvals, existing balances, and monthly repayments, you can check the website directly.
How can I find my student loan account number?
When you create an account on the StudentLoans.gov website, you’ll receive an identification number known as your FSA ID. In addition to your name, your FSA ID is the key piece of information that is included in your loan details. You can easily find this by logging in to your account.
Can I be denied a federal loan?
While they’re significantly more welcoming than private student loans, there are several reasons why you may be denied a federal student loan. These include:
- Having an existing default on a federal student loan
- Not meeting the enrollment requirements (studying at least half-time) or not meet the satisfactory academic progress requirements
- being an ineligible non-citizen
- being convicted for a drug offense
- being incarcerated
How much money can I borrow with a Federal Student Loan?
Thanks to the variety of programs offered, students can borrow a significant amount of money based on their educational track. While subsidized and unsubsidized loans have a lifetime cap (subsidized loans, for instance, max out at $23,000) you can apply for a lifetime total of $57,500 if you’re an undergraduate student, or up to $138,500 if you’re a graduate student.
How can I apply for a Federal Loan?
to get started, you should first talk to your university’s office of student aid to determine how much you qualify for and if you need student loans. Then, simply visit StudentLoans.Gov to start filling out your FAFSA form and determine which loan is the best for you.
When do I have to start repaying my student loans?
One of the benefits of student loans is that you don’t have to start paying them immediately. Indeed, while many federal aid programs require that you at least pay the interest that accrues on your loan while in school, all of them include a grace period of at least six months after you’re no longer enrolled before you must start paying down your principal amount.
Where Next?
