Why Student Debt Repayment Is Easier With Federal Loan Than A Private Loan

Researches have shown that the cost of attending a college in most part of the world is rising tremendously. This rise in the cost of higher education does not exempt students who hail from poor backgrounds. This means that many students have to pull out of school because schooling is no longer affordable for them. However, you may apply for a loan instead of pulling out. This allows you to school with relative comfort and repays your student debt after school.

It is important to have a fore knowledge of the types of loans that are available to you as a student. This will help you to for the choice that is best for you. If you are hoping to use the loan to pay for your tuition, you need to consider if the amount that can be loaned to you will fit the bill. You need to understand repayment plans. Generally, a federal study loan will see to most of your financial needs on campus.

Hence, you should apply for federal Stafford loans first before going for private loans. One advantage of federal loans over student loans is that it is easy to service them. Another important advantage of federal loans over private loans is in the low interest rate. Most private financial institutions give loan for high interest, but, the state give loans to help students.

The federal loans are available to undergraduate college students and graduates who attends college half time minimum. The undergraduate loans have a fixed interest rate of 3.40%. The borrowing limit per year is $ 20,500. This amount depends on course of study and years in school. However, you must have fulfilled some basic requirements before you will be considered.

For graduates however, loans have fixed interest rate of 6.80%. Graduates can also borrow up to $ 20,500 per year. The after school repayment plans also applies for graduates. Hence, you do not have to worry yourself about repayment while in school.

To qualify for a federal study loan however, you must be a full United States citizen or a permanent resident in the United States or an eligible non-citizen who is allowed to enroll or you attend an institution that benefits form the Federal Family Education Loan Program (FFELP).

While many people find it difficult to repay loans, you should not encounter such problem with federal loans. The fact that you do not need to pay back as a student is one advantage. Repayments plans are also fair thereby making student debt servicing much convenient.