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Are you dreaming of attending college but worried about the cost? Well, you are not the only one. With tuition prices moving up every year, most students need some financial help to go to college. This is where student education loans come in. There are in fact so many different student education loan options, but when it comes to obtaining student loans, the best options can be found in Federal programs.
The educational loan programs sponsored by the Department of Education’s student loan are intended to help students like you to get the education you need without the stress of debt. This guide will go over all of the essential information you will need to know, in a simple and straightforward manner.
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What is a Student Loan?
Okay, first things first: What exactly is a student loan? In simple terms, it’s money that you borrow to pay for your education, and you have to pay it back (hopefully with interest). Student loans are much different than scholarships and grants, which are free money. You can think of a student loan as borrowing money, with a promise to pay it back in the future{1}.
The largest source of student education loans in the U.S. is the US Department of Education student loans program, which also includes state-specific options like the Department of Education MN student loan for Minnesota residents.
Types of Student Loan Programs
There are several different types of loans offered by the Department of Education student loan program. Let’s break them down:
- Direct Subsidized Loans: These are for students with financial need. The nice thing about these loans is that while you’re in school, the government pays the interest.
- Direct Unsubsidized Loans: These are available for everybody, but the interest starts when you take out the loan, even while you’re in school.
- Direct PLUS Loans: These are for parents of students or for grad students. It has a credit check, which makes it different from the normal student loan.
- Direct Consolidation Loans: If you’ve taken out a number of loans, this gives you the option to merge them into one monthly payment.
Who Can Get a Federal Student Loan?
The beauty of the US student loan department of education is that essentially anyone can apply. All it requires is that you fill out the FAFSA (Free Application for Federal Student Aid). To be eligible:
- You must be a U.S. citizen or other eligible non-citizen.
- You should be enrolled in an eligible program leading to a degree or certificate.
- You have to make satisfactory academic progress.
How Do You Apply for a Student Loan?
The application process is simple. It begins by completing the FAFSA. Here is what you will need:
- Your Social Security Number
- Federal income tax returns, W-2’s, and other records of money earned
- Banks (savings and checking) statements and records of investments
- A list of the schools you’re interested in
Once you submit the application, you will receive a Student Aid Report (SAR) that shows your eligibility. Easy, right?
Interest Rates and Repayment Plans
The low interest rates are one of the best things about Department of Education student loans. Plus, repayment programs are flexible:
- Standard Repayment Plan: Fixed payments over ten years.
- Graduated Repayment Plan: Payments start low and get larger over time.
- Income-Driven Repayment Plans (IDR): Payments are based on how much you actually make.
- Extended Repayment Plan: You can extend payments to fifteen, or even twenty-five years if needed.
Can Your Student Loan Be Forgiven?
Excellent question! The answer is YES, sometimes. The student loan department of education programs have some forgiveness options:
- Public Service Loan Forgiveness (PSLF): If you work for 10 years in government or a non-profit organization your remaining loan balance can be forgiven.
- Teacher Loan Forgiveness: If you teach in a low-income school for 5 years, you might get up to $17,500 forgiven.
- Total and Permanent Disability Discharge: If you are unable to work due to your disability, you may never have to pay back your loans.
Staying on Top of Your Student Loans
Managing your student education loan isn’t as bad as it seems. Here’s some suggestions:
- Know your loan balance and interest.
- Set up auto-pay so you’ll never miss payment.
- Explore deferment or forbearance if you’re not able to make payment.
Need to check loan status? Visit the Department of Education student loan login portal for status updates.
The Good and the Not-So-Good of Federal Student Loans
Pros:
- Low interest rates
- Flexible repayment plans
- Options for loan forgiveness
Cons:
- You have to pay it back, with interest.
- It can take years to fully repay.
What If Federal Loans Aren’t Enough?
If you realize federal loans do not fully meet your needs, you still have options:
- Private Student Loans: These can cover the remainder, but the interest rates are typically higher.
- Scholarships and Grants: Free money! Apply to as many as you can!
- Work-Study Programs: Work earn while you study!
Conclusion
Completing your degree is an important step towards your future and student education loans can help you get there. By considering your options available through the US department of education student loans program, you are on the right track. There are research choices, applying for aid early, managing your repayment options, etc… All of these items will help you to be organized. With the right financial support, your college dream is within reach. Take the first step and explore your options with confidence.
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