Every student applying for school loans will be required to fill out the application simultaneously in order that those ineligible for financial assistance will still have the option of getting money through a government-funded loan. Federal school loans are handled by the Department of Education.
Furthermore, federal student loans are offered to help students on a demand ground from the government. It is advisable for them to accomplish a Federal application for student financial aid form, which automatically puts a student in consolidation for federal assistance.
If you demand a student loan through the government, you can qualify for the very outstanding Stafford loan. This loan has two different types. There is a bit difference in these sub-types as subsidized loans do not charge or form any interest until the time you start to repay them. This sub-type of federal loan often begins interest from the moment the school loan is required. Provided that students are going to an eligible school on a part or full-time foundation, they are qualified for this sort of loan. A subsidized Stafford loan is underwritten by the government and gets on a need foundation. It does not have to be paid back. On the contrary, a non subsidized Stafford loan is underwritten by the government, but it must be paid off when the student finishes school.
Then what are the advantages and disadvantages of consolidating your federal student loans? This question depends partly on how much you owe, how much you have already repaid, and other personal financial variables.
In fact, consolidating the loans offers you the small student loan consolidation interest rates and variable repayment alternatives. When you consolidate, you as well get the chance to pay the loans back over an extended period of time, which will cause lower monthly payments. More fruitfully, there is no fee and no credit check when you consolidate your government student loans. Furthermore, there is no penalty for paying the loan off early and the loan application process is much simpler than it is for other types of loans.
Inspite of the pros indicated above, there are some disadvantages that you should consider on consolidating this type of loan. If you get an extended payment plan, you will pay more interest in the course of time. If your loan is big, this could cost you thousands of dollars and have a negative impact on your financial future. Furthermore, it is possible that the student loan consolidation rate will be higher than the interest rates on your other loans. Thus in this case, consolidation is not to your advantage.
Also, you should bear in your mind the fact that if you consolidate your loans during the six month grace period after graduation, you lose the remainder of the grace period. If you've already paid off a large chunk of your student loans, consolidation may not be worth the money or attempt.
To summarize, both private lenders and the government alike are wishing to ensure that students take the fortune to take advantage of the chance to receive a college education. With the small student loan consolidation interest rates and government protection on these loans, there is not a better way to consolidate than through a federal student loan.