5 Federal Family Education Loan Benefits

Federal family education loans offer an efficient way for students and parents of students to seek financial help with money for college expenses for undergraduate, graduate and vocational programs. Among the benefits of the major programs offered as federal family education loans are:

1. Flexibility in Choice of Loan Programs

Three types of loans are available through FFEL, or Federal Family Education Loans.

  • Loans for Students - The subsidized and unsubsidized Stafford Loan programs provide a government-subsidized interest rate, typically below market rates, to qualifying student applicants. The primary difference is subsidized Stafford Loans have interest paid by the government while the student is in school. The unsubsidized program requires the student to pay the interest while in school.
  • Loans for Parents - Also among federal family education loans are programs for parents of qualifying, dependent students who are enrolled in a qualifying institution at least half time. The PLUS program, which stands for Parent Loan for Undergraduate Students, allows parents to borrow with federally-backed loans for the amount of college expenses above that covered by other aid. There are also PLUS programs for graduate and vocational programs.
  • Consolidation Loans - If multiple student loans represent a financial burden, federal family education loans also include a loan consolidation program which pays off the multiple loans, combining them into one loan. Depending on factors such as interest rates, length of the loan and other loan terms, this can result in a lower monthly payment.

2.  Flexibility in Qualifying for Loans

With options for students and parents, if a student cannot qualify for a loan and the parents can, then the college financing need can be met. But these federally-backed loan programs also offer options for students with no credit history and no cosigner.

Parent loans can be available even if parents might not typically qualify as they do allow non-family cosigners.

3.  Dollars Available to Lend

Federal family financial loans were funded with more than $55 million in available dollars in the 2008 federal budget.

Stafford Loans can be as high as $20,500 for the unsubsidized program. The average PLUS loan is $11,500, and the average consolidation loan is $30,000.

4. Streamlined Application Process

Applications for federal family education loans are processed through FAFSA, the Free Application for Federal Student Aid online system. With FAFSA, the applicant provides extensive family financial data and an Expected Family Contribution is determined. Applicants then know how much they are responsible for in total college costs.

This information also is available to states and colleges, so they can determine if the student qualifies for non-federal dollars as well.

5. Repayment Options

Programs such as subsidized Stafford Loans offer the possibility of payment deferment for education, unemployment or other economic hardship reasons.

Student loan repayment options also are a benefit of federal family education loans. These loans are made by private institutions though they are federally-backed and considered federal student loans. Repayment options can include a plan tailored to your income as it grows as you spend time in the workforce. The individual lenders can also work out extended payment options.

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