Available to both college and university students in the USA, federal loans help to supplement personal / family resources, scholarships, grants and working experience projects. As a rule of thumb these loans are deposited directly to the schools themselves, and the funds are released accordingly to the specific students involved.
According to the Student Aid US website (studentaid.ed.gov); “…you will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half time.” Ergo, repayment of the federal student loan does not commence until post graduation – allowing students the opportunity to focus solely on their schooling as opposed to being concerned about finances.
Depending on financial need, federal student loans can come in two main formats. The US government offers subsidized federal student loans for students from families in dire financial situations. Should the student come from a family of firm financial footing, then a non-subsidized federal student loan would be applicable.
Ultimately, the two key benefits of obtaining a government subsidized federal student loan are; any interest on the loan is covered by the government for the duration of the student’s enrollment in the education; a reduction in interest rate is applied to students obtaining a subsidized federal student loan.
Interest rates for federal student loans are tiered based on subsidization. Students on a subsidized loan should expect to pay circa 6% interest back (2010 figure) – whereas students on a non-subsidized loan can expect to be making repayments at the interest rate of 6.8%. The US government maintains that these rates are always “lower than on a private loan.”
Federal student loans are noted for being a key factor in boosting credit records of the students involved, and as nearly all students are eligible for some form of federal student loan and as the grace period post graduation is historically set at six months it is a scheme set up to offer an affordable method of financial support in order to assist all American students in some way, regardless of financial superiority or lack thereof.