Why Choosing Federal Student Loans is the Best Option


When you’re considering to get admitted in college or go for some form of education after high school, then going for financial aid or assistance becomes a priority for you. It naturally comes to your mind since the overall college tuition fees becomes a heavy toll for you. Paying for your college education can easily become your primary responsibility and sometimes all that your parents have contributed isn’t just quite enough. You have to consider the possibility to look for other resources and funds.

The US Department of Education provides more than $150 billion in federal student aid programs for students who are seeking post-secondary education. But with an escalating number of students opting for such programs, the number is increasing for more and more students and the private student loans are becoming aggressively complicated with interest policies and rates. However, in contrast with federal student loans, about 14 million students receive federal student aid which can easily be available from colleges, private scholarship funds, companies or from the state department where you live.

There are sources which can help you pay for your college, here we would give you a few tips to consider federal student loans as these are based primary on your financial need.

Choosing Federal Student Loans as Your Financial Decision for Your College Program

One thing you have to understand about Federal student loans is that they are real loans, just like your car or mortgage loan, which means that you still have to repay it as they can’t be written off in bankruptcy or be canceled because you didn’t get the education (unless your school was closed) or the job you expected. So why should you consider a federal student loan? Because federal student loans offer borrowers with lower interest rates and have more flexible repayment options as compared with other loans from banks or any other private sources.

The thing about federal student loans is that the federal government is the main provider and with the funds available, applying for financial aid from them becomes a good option as it includes:

  • Grants – money that doesn’t have to be repaid unless in some cases when you withdraw from school
  • Loans – money which you borrow for school has to be repaid with a lower interest rate
  • Work – Study – money which you earn to pay for your education

There are different types of federal student loan programs being offered by the US Department of Education. They are offered to undergraduate and graduate students who can demonstrate their financial need. Different conditions are applied from different FSLs (Federal Student Loans). Some FSL have the college as the lender and for some, the US Department of Education is the lender. Some have fixed annual interest rate while others can have less.

Another aspect for FSL is that you can’t borrow more than your cost of attendance, minus any other financial aid that you get, you may receive less than the annual maximum amounts. Also, the annual loan limits assume that your program of study should be at least for a full academic year. The advantage for federal student loans is that the federal government pays interest on subsidized loans during grace and deferment periods.

Important Points to Ponder

However, not all schools participate for federal loan programs, so you need to contact your school’s administration or counselor if they participate for federal loan programs or not. There are many students who rather go for scholarships or grants, not everyone can avail them so you should consider FSL with lower or fixed interest rates, repayment plans, no prepayment penalties and no credit checks.

However federal student loans might not be aggressively marketed to students in general with mails, TV commercials or any other media, they are generally for those students with greater financial need and can qualify for subsidized loan.

Planning Ahead When You Graduate

After you have explored and known about various non-loan and low interest loan options, you can also reduce your cost of attending college. You can choose a less expensive school or a community college before you can transfer yourself into a high ranking college where you can transfer your credit hours also. One thing you need to be concerned about is if you’re in debt, you must keep a sharp eye on it as debt intends to add up quickly. There are many ways to avoid the over increasing debt for students like:

  • Search and opt for more scholarships or grants from other schools or institutions
  • Work while you’re in school, look for part time jobs in schools like working in the cafeteria etc.
  • Keep a check on your spending habits, learn to save more
  • Consider getting admitted to a less expensive school.
  • Minimize eating out
  • Buy used books instead of new ones or look for passed out students who are willing to donate their books

These Saving tips would eventually help you to save more for your college program. Remember, the US Department of Education spends billions of dollars in federal student loans to help students. Avail this opportunity and enable yourself to pay for your college program and get your dream job after a few years with the support of your education.

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About The Author

Rachael Everly is an undergraduate student who loves to write on the topics related business,finance and education. Follow @Rachael Everly for further updates

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Rachael Everly is an undergraduate student who loves to write on the topics related business,finance and education. Follow @RachaelEverly for further updates

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