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Student Loans: Outlining what you should know
Student loans are an invaluable resource for millions of aspiring college students to realize their dream of a higher education. Student loans may make going to college possible when there are no other options or financial resources to draw upon. Considering few potential students can actually afford a college education without some form of educational financing, it's easy to realize why more and more people and their families are turning to the world of student loans. Scholarships, grants and work-study programs rarely are enough to cover the rising costs of a higher education and all that it entails. Many students have realized that they must finance their educational expenses through private or governmental loans. Federal loan programs offer much lower interest rates and more flexible repayment schedules than most consumer loans do, which make them a plausible way to finance your schooling. Education loans for students are comprised of four major types; student loans, examples of which are the Perkins and Stafford loans, parent loans such as the PLUS loan and then there are private student loans, also referred to as alternative student loans. The fourth type is the consolidation loan which allows the borrower to lump all of their other loans into one for one easy payment and one interest rate. The student loan most often acquired is called the Stafford Loan which consists of two variations. The FFELP or Federal Family Education Loan Program offers loans that are privately funded by lenders such as banks, savings and loan associations and credit unions. Loans obtained via FFELP are guaranteed against default from the government. FDSLP or Federal Direct Student Loan Program loans are provided by the US government directly to students and or their parents and are administered by direct lending schools. Either type of Stafford Loan is subsidized, meaning the government pays the interest on the loan while you're in school, or unsubsidized where you pay the interest but can have it deferred until after you graduate. Parents of a college student can also apply for a federal loan called the PLUS, or Parent Loan for Undergraduate Students. This allows parents to borrow funds to cover costs that aren't already paid for by other financial aid resources or loans. Some features of PLUS loans are fixed interest rates, repayment beginning 60 days after the funds are disbursed and the borrower may also take up to ten years to repay the loan. Private or alternative student loans are often based on credit scores to determine eligibility. Privately funded loans tend to be more expensive than those that are funded by the federal government, but they do offer lower interest rates than other methods such as borrowing against a credit card. The federal government also has a program called Loan Forgiveness, making them even more attractive to prospective college students. To qualify for a Loan Forgiveness program you must meet certain criteria such as perform volunteer work or military service or teach or practice medicine in certain types of communities. There may also be other requirements set forth by the particular loan forgiveness program you apply for.
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