A Look at the New Student Loan and Its Advantages

Jun 14th, 2010 @ 6:21 PM by Debbie Dragon

Students heading to college in 2010 will be the first to take part of the new student federal loan program. In the past, student loans were funded by private entities, but no longer. Here on out students will borrow directly from the federal government, which comes with some great advantages. Here is a look at what it is all about.

First, students and parents will be able to take advantage of an easy, free application process. There is just one form to fill out and it can be obtained right from your University.

These federal loans now come with even lower locked in interest rates, for those that qualify. Subsidized Stafford loans are available to certain students and these loans will have deferred interest for as long as you are in school. Once you are out of school your interest rate will be a fixed 4.5%.

After you graduate your loan payments will be more affordable than ever before thanks to the revamped income based repayment program. If you consolidate your federal loans with the federal government, you will be able to have a monthly affordable payment, related to your income. Your payment will be capped at 15% of your income. After a certain time period, depending on your occupation, you will also be forgiven the remainder amount of your loan.

There are some definite advantages to funding your college education through the federal student loan program. To begin with federal loans are fixed interest loans, meaning the interest rate does not change from year to year like many private loans. Ultimately, you will not have to worry about your loan payment going up when interest rates rise.

Federal loans are also deferred while you are going to school, meaning you do not need to start making payments on your loan until you are out of school. Keep in mind though that unsubsidized Stafford loans and Grad PLUS loans will accumulate interest during the deferred time period.

Holders of federal student loans, as already mentioned can also take advantage of low income repayment plans. If the holder has a good income and wants to pay back their student loan at a faster pace and early, there are also no penalty fees.

The new program starts on July first of this year. To learn more you can visit http://www2.ed.gov/offices/OSFAP/DirectLoan/newschools.html.

2 Responses to “A Look at the New Student Loan and Its Advantages”

1. Finance loan says:

   July 19, 2010 at 4:13 am

   Every now then what happens is that no matter how intelligent or how rich a person is, a situation is always liable to come up that catches us a little short of money.
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2. Debts says:

   July 20, 2010 at 9:17 pm

   Federal loans are fixed interest loans,interest is not change from year to year like many private loans its useful to students.
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   Marlynn