Posted on July 11, 2011 by Admin
The cost of education is increasing day by day. Financing the entire education, from school to post graduate level, is difficult for many of the parents. So, if you are unable to support your education, you can apply for a student loan. The rate of interest on student loans vary with lenders. One of the best way you can finance your education is by applying for a loan with the Federal Government as they offer various types of cheap student loan.
What are the different types of Federal student loans?
When you wish to obtain a cheap student loan, you must try to get it from the Federal Government. The Government loans are available at a low rate of interest as compared to the ones offered by private lenders and also have lenient repayment plans. There are 3 types of government student loans. These are:
1. Stafford Loan: Stafford loans offer a fixed interest rate, as low as 5.6%. You do not have to make any payment towards it when you?re in school. These loans are easy to obtain as the approval does not depend on credit. The Government also offers subsidized Stafford Loans to students who have extreme financial need. The interest that accrues on a subsidized loan is paid by the Federal Government.
2. Perkins Loan: The Federal Perkins Loans are awarded to undergraduate and graduate students with exceptional financial need. Based on how much you need it and your school?s funding level, you can borrow $4,000 for each year of undergraduate study and $8,000 for each year of graduate or professional study. This is one of the best source of cheap student loan as the rate of interest is only 5% and you are not charged any origination fee. The program is campus-based and the campus awards the loans to eligible students on a first-come, first served basis.
3. Federal Parent PLUS Loan: If you cannot obtain a student loan to finance your college education, you need not worry. Your parents may be able to help you out by obtaining a Federal Parent PLUS Loan. This loan is designed for parents of dependent college students and provide assistance to support the total cost of undergraduate education of their child, minus any other financial aid the child is receiving. This type of loan is credit-based and your parents have to begin repaying the loan as soon as it is fully disbursed. In spite of these disadvantages, it is a popular option to finance education as the rate of interest on it is comparatively lower than the rates offered by most of the private lenders.
There are also many schools and colleges that offer student loans to parents who cannot support their child?s education. You can also apply for a cheap student loan with different charities and non-profit lenders. However, if you cannot obtain a loan from your institute, non -profit lenders or the Government, you must shop around and compare interest rates offered by the different for-profit private lenders in order to obtain a low cost loan.
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