Federal Student Loans
Federal Student Loans Overview
College costs continue to rise, year after year, with no end in sight. It is a problem that faces today's graduating high school seniors and will only get worse in the coming years. While some students are fortunate to have family financial support in college, many of us are not so lucky. A part time job helps as well, but realistically it won't cover the full cost of education. After all, if you had a high paying job, you wouldn't need to be going to school in the first place! So, what's the smartest way to pay for school? Via federal student loans, that's how.
What is a Federal Student Loan, and why is it better?
Federal student loans are funds provided to students by the United States Government. These loans are superior for several reasons. For starters, you have the backing of the federal government, so you don't need to worry about unfair or shady business practices like you might observe from a private lender (for example, changing the terms of your loan, unfairly raising your interest payments, etc). Probably the most important reason for getting a federal student loan however, is the likelihood that you will pay a much lower interest rate than you would compared to a private loan. As an example, a federal loan such as the Stafford has a set rate of 6.80%; a private loan can be in the ten to fifteen percent area. Unfortunately, you can't always cover the full cost of your education just by using federal student loans.
Where can I find a Federal Student Loan?
There are a lot of sources of federal student loans, and the process can become confusing. You should begin by filling out a FAFSA, the free application for federal student aid. After you submit that, you will receive a SAR (student aid report) for your trouble. Then you will take the SAR to your financial aid office on campus, and they will assist you in determining which federal student loans (Stafford, Perkins, etc. that you'll be eligible for).