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Government Education Loans

Educational loans are meant for people who cannot afford education. They are a great way to complete higher studies if limited by financial constraints.

There are many kinds of education loans available today. These can be classified based on the sponsor (federal or private), according to the beneficiary (undergraduate, continuing education, insurance loans, parent loans, payment loans), or according to the course of study, be it law school, medical school, dental school, MBA, general graduate, or post graduate. Another kind of loan is a career loans for people who are pursuing graduate or postgraduate education on a part-time to full time basis. This includes evening, weekend, distance learning, and continuing education programs.

Federal loans are those provided by the government. These loans are offered at comparatively low rates of interest since the interest on these loans is paid by the government. Stafford loans are the most common federal loans. There are two kinds of Stafford loans: subsidized, and unsubsidized. Subsidized Stafford loans require proof of low income. Here, the interest is paid by the federal government while the applicant is in school at least half-time. Unsubsidized Stafford loans, on the other hand, are those that do not require proof of income, as anyone is eligible for these loans irrespective of their income status. The interest for these loans can be paid while the applicant is still in school or it can be held off until six months after graduation.

Federal loans or government education loans are also available for parents. These are called PLUS (parent loan for undergraduate students) loans. These are insured by the government, hence they have lower rates of interest. Parents of undergraduate dependent children are eligible to receive these loans. There are several advantages with these loans. Firstly, parents can borrow the total cost of college education (excluding any financial aid already received). Here, the interest rate is variable though there is an upper limit; the payback period starts 60 days after the college receives the money. Financial need is not a necessary criteria for applying for these loans, although certain credit guidelines have to be followed.

Federal loans can also be consolidated- in the sense- separate federal loans can be combined into one. This would help to eliminate the hassle of paying more loans. Since the repayment period can be extended, the monthly payment also decreases. Consolidation provides various options for repayment as well.

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