6 Advantages to Federal Student Loans
Despite the credit crunch, some banks are marketing private educational loans with seemingly low interest rates. And some students think they can save money and hassle by putting their college charges on their credit card.
But those funding choices can end up costing thousands in extra interest and fees, says
A few hours invested in filling out a Free Application for Federal Student Aid and arranging for federal student loans can save big money and heartache.
1. Federal loan interest rates are fixed, so payments won't rise if rates rise.
2. The government provides free insurance, so your loans are canceled if you are killed or disabled.
3. The government allows you to defer payments while you attend school at least half-time. (Be warned: the government keeps adding interest on two common kinds of graduate loans: "unsubsidized" Stafford and Grad PLUS. So while you won't be charged penalties or fines, your total debt will keep rising. MBA candidates who borrow, for example,
4. Students expecting to go into low-paying or public service jobs can choose monthly payments that match their low incomes by applying for "Income-Based Repayment." That program requires them to pay no more than 15 percent of their income, instead of a fixed payment. Students who take out loans after 2014 can limit their future payments to 10 percent of their income. The first step is consolidating your federal student loans into one directly with the federal government. Then, debtors are supposed to fill out an application that, among other things, enables the
5. Students who consolidate their loans with the federal government, apply for "Income-Based Repayment," and continue to make on-time payments can get at least some of their debts forgiven. Public servants can wipe out their remaining debts after 10 years. Currently, those with low incomes who continue to make payments can wipe out their remaining federal student debt after 25 years. Starting in 2014, the length of time until low-income forgiveness will drop to 20 years on all new loans.
6. Unlike some private lenders, the federal government doesn't charge you anything extra for repaying your student loans early.
- Inside Scoop on Working in Study Groups
- Extreme Environmentalism
- College Courses That Will Pay Off at Work
- 6 Advantages to Federal Student Loans
- How to Launch Your Career In a Lousy Economy
- The Rise of Asia's Universities
- How to Get Your Child Into the Right College
- So You Want to Transfer
- Protect Yourself From Crime on Campus
- A Word for the Rejects
- Business Schools' Great Ethics Debate
- Jobs With Great Return on Investment
- Colleges Go Green for Earth Day
- Maximizing an Online Education
- Student Loan Crunch May Be Easing
- Internships Near Necessity in Quest to Find Job in Today's Market
- You Can Work Your Way Through 11 Grad Degrees
- Turn Education Into New Job: Short-term Routes Lead to Career Growth
- Getting Into Graduate School Made Tougher by Recession
- Colleges Attract Students With Unique Campus Tours
- Questions to Ask on College Campus Tours
- Jaime Escalante: He Had Ganas
- You've Been Put on the Wait List for College. Now What?
- How to Pick the Best College for You and Your Wallet
- 8 Big Mistakes Online Students Make
- Online Certificate Programs Offer Fast Track to New Career
- No Child Left Behind & Reform Killing Public Education
- Big Changes Coming to Student Loans
- Snag Your Dream Internship
- Smart Ways to Live Cheaper on Campus
- YouTube the New Essay in College Applications
- High School Senior's Advice on Picking Right College
- Colleges Where Need for Aid Can Hurt Admission Odds
- 7 Steps to Find a Great Affordable College
- Do Colleges Prefer Rich Applicants
- How to Pick the 'Right' College
- Latin America Leads in School Laptops
- NCAA Men's Basketball Graduation Rate Disparity Between Races Grows
- NCAA March Madness & Diploma Sadness
- Organize Your Study Space
- Cleaner Greener College Living
- You're In! And Here's a Free T-Shirt
- Why College Students Cheat
- Fraternities & Sororities: Going, Going ... Greek?
- Alternative Spring Breaks Combine Service & Learning
- How to Relax and Ace Your College Exams
- Making Majors out of Math Skills
- Free Online Course Offerings Grow in Abundance and Popularity
- Will You Get Enough Financial Aid?
Education: 6 Advantages to Federal Student Loans
(c) 2010 U.S. News & World Report