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Government Student Loans

Financing college education is the most daunting task faced by many students in the United States. Fortunately, the federal government knows about this integral issue and has made arrangement for several financial aid schemes to help students in need of assistance for paying for college. The schemes include grants, federal work-study programs, and federal government student loans.

Although a grant is the best form of financial aid as it is gift money and doesn’t have to be paid back, but not all students get grants. Government student loans are the most common part of the financial aid package allotted to thousands of students each year.

Types of Government Student Loan

There are several types of government student loans mainly differing on the basis of subsidization. The main step for application for loans with student as the receiver is the submission of Free Application for Federal Student Aid (FAFSA). Following are the most popular types of government loan programs devised for financing college education:

Perkins Loan

With a 9 months grace period after graduation and a low 5% interest rate, the Perkins Loan is only given to students in extreme financial need. Moreover, the Perkins Loans are government subsidized student loans, which means that the interest during the student’s education and grace period is paid by the government; the repayment period is ten years.

Stafford Loan

The fixed interest rate loan with rates going as low as 3.4%, the Stafford Loan is a gov student loan very popular among students. It comes in two packages; the subsidized version with 3.4% interest rate needs you to display financial need on your FAFSA, and the unsubsidized version with 6.8% interest rate doesn’t require a display of financial need for approval. However, the interest starts accruing on your unsubsidized loan as soon as you receive the first payment.

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