The US department provides loans to help the students to cover the cost of their education. They provides low cost loans to graduate and undergraduate students and also to their parents. They provide loans which are direct subsidized loans, direct unsubsidized loans, Parent PLUS loans, Grad PLUS loans and Direct Consolidation Loans.
If a student wishes to avail the Loan he must file Free Application for Federal Student Aid and must satisfy general requirements. He must also enroll himself to notified college or University in order to apply for loan. Federal student loans offer options for temporarily delaying payments, repayment plans that reduce monthly payments by increasing the term of the loan, and loan forgiveness and loan repayment assistance programs for students.
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Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education at college or university, community college, or trade, career, or technical school.
PLUS loans are loans that graduate or professional students and parents of dependent undergraduate students can use to pay for the higher education of students. PLUS loans can help pay for education expenses but they should not be covered by any other financial aid. The U.S. Department of Education makes Direct PLUS Loans to borrowers through schools participating in the Direct Loan Program. The US government provides loans on the basis of the cost of education and the attendance required at the specified school and colleges.
Difference Between Private Student Loans and Federal Student Loans
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Payments do not become due or the parents or student can put off the payments till the student drops out or become graduate or changes the enrolment status. Thus there are chances that payment can be done after one starts earning but it is not in the case of Private loans. In private loans one have to make payment while the course is running.
The students who are in a great financial need can apply for lower interest rates and subsidized loans in order to reduce burden but private loans are usually not subsidized and the whole payment needs to be done.
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In Federal students loan the interest rate on loan is generally fixed and low as compared to those of private banks offering loan to students. The interest charges of private bank are fluctuating in nature.
If eligible, the student can apply for loan forgiveness and can get benefit of reduced loan payment but in private loans one need to do full payment but there are certain benefits available in private students loan.
The Federal loans can be consolidated at the discretion of the borrower whereas the option is not available to the borrowers from private bank student loans.
All in all the loans from Banks for educations proves to be boon for students as they are not restricted from getting education only because of fund constraints and is helpful for framing better future by getting higher education. Even they get time to repay the debt thus gets supported by government for higher education.