Federal Education Loans and Their Advantages

May 31, 2012 · Posted in Finance · Comment 

Today there are many ways to fund your education expenses. People understand that higher education is vital for career opportunities and for this reason do all their best to find the most affordable funding sources.

One of the main college funding strategies that do work today is to apply for federal student loans.

Federal education loans are loan products offered by the federal government for student and parent borrowers for purposes of covering education expenses like tuition, books and others. It’s a fact that these loans have lower rates and some types of federal loans are the most inexpensive in the market. If you want to apply for private student loans then try to apply for federal loans first.

The second advantage of federal student loans is that they are designed for needy students (except Parent PLUS loans). Dealing with need-based criteria does mean that a potential borrower doesn’t have to have high income level. In other words if you have financial need and low-income you can still qualify for the loan you want. In fact, several types of loans (Perkins and Subsidized Stafford) are specially designed for student who demonstrates huge financial need. Because the government really cares about citizens and is focused on improving various important spheres including education it offers federal student aid options that can be received regardless of your financial situation. And also it’s easier to apply and qualify for federal loans rather than for private aid options.

The third advantage of federal aid is that a borrower can qualify regardless of bad credit score he or she might have. If a student has unpaid debts in the form of credits and as a result bad or little credit history it’s not an obstacle and can’t be a problem. A borrower can still apply for federal loans (except Parent PLUS loans) successfully and receive needed funding.

It’s important to understand that the government plays an important social function – provides opportunities for students for an education. And in this case the theme of an income level, credit history (bad or no) doesn’t really matter. Summing up, a student applying for federal education loans could have low income and bad credit score and it won’t be a problem.

The next advantage is that no cosigner required in order to qualify. And it’s good. Unlike alternative loans where it’s a must to have a cosigner if you have an adverse credit history, with federal loans you could have no credit history plus no cosigner.

As a conclusion, thinking about all pros of federal loans it’s required to keep in mind that college funding process is tough and a prospective borrower should make a good research about student aid options and define which are the best.

And finally, read more articles to know how school loans work. We prepared the best guide about great lakes student loan servicing as well.