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Funding your Education with Federal Financial Aid: Federal Loans
by Brooke Heath 3/13/07

Congratulations on taking that first step to securing your future career and finances by attending college! Though obtaining a college education is well worth all of the hard work and stress, it can also be very expensive! Fortunately, there are many financial aid options available to help you reach your goal of earning a college degree.

The first in a series of articles on how to fund your education with federal financial aid, this article will provide you with information on federal loans such as: the benefits, the different types of federal loans and the perks to consolidating your federal loans.

The 4-1-1 on Federal Loans

Federal student loans are guaranteed by the federal government, and are the largest source of financial aid available. Many students choose to take out federal loans due to their low interest rates, as well as their extended repayment terms. Because federal student loans have such low interest rates, they are generally a lot less expensive than private or alternative loans.

Federal loans also give borrowers an in-school deferment and grace period. The in-school deferment option allows borrowers to avoid making scheduled payments while they are enrolled at least half time in school. When the student graduates or falls below half time status, they are allowed a grace period of six to nine months (depending on the type of loan), before they must begin repaying their loan(s).

Borrowers are also given deferment and forbearance options on their federal loans. These options allow borrowers to temporarily suspend their payments for a specified period of time due to financial hardships or other circumstances which make it difficult for the borrower to make his or her monthly payments.

Federal loans are a great option for borrowers who have a poor credit history, or have just not yet established a credit history. This is because, unlike alternative or private loans, federal loans do not require a credit check. Because federal student loans are not credit-based, there is no need to beg your parents to cosign.

Another great thing about federal loans is that they do not have prepayment penalties. This allows borrowers to pay back their loan as soon as they would like. Students may even begin to make payments on the interest while they are still in school to avoid a higher balance on their loan afterwards.

Speaking of interest, for those who qualify, there are federal subsidized Stafford loans available, in which the government will pay the interest that accrues on your loans while you are in school, in your grace period, or if you use your deferment option.

Types of Federal Student Loans

The types of Federal Loans that are available include:

  • Stafford Loans
    • Subsidized
    • Unsubsidized
  • Perkins Loans
  • Federal Parent Loan for Undergraduate Students PLUS
  • Graduate PLUS Loans
  • Federal Consolidation Loans
The FAFSA: The First Step to Federal Loans

So, you are sold on federal student loans, and you are ready to apply. The first step in applying is to complete a Free Application for Federal Student Aid (FAFSA) form. This form will provide the government information about your financial situation, etc, and will help them determine your eligibility for federal student loans, as well as grants, and work study. In addition to providing information to the government, most two-year and four-year colleges, universities and career schools use the FAFSA to give out their federal loans and other financial aid.

Consolidate and Save!

Another huge advantage to borrowing federal student loans is that they can be consolidated. Consolidation merges all of your outstanding federal student loans into one, easy-to-manage loan, as opposed to several. This cuts out the hassle and stress that can come from making multiple payments each month to different lenders. Consolidating not only saves you time, but also a lot of money! (Did that catch your attention?)

When you consolidate your federal student loans with a true lending company like EdFed, you can literally save yourself thousands of dollars over the life of your student loans. This is because consolidation gives you a low, fixed interest rate and extended repayments terms, which makes an already good thing like federal loans, even better! Also, when you consolidate your outstanding loans with EdFed, you can save even more by taking advantage of our incredible borrower benefits! These benefits can save you an additional 1.25% off of your already low, fixed interest rate!

EdFed: Dedicated to Helping Students

When you choose to consolidate your loans with a true lending company like EdFed, you are guaranteed professional, accurate service. As a leader in the industry, EdFed is dedicated to helping students reach their educational goals and manage their student loans. Our team of experts work with you to ensure that you understand the process and address any concerns of questions that you may have along the way.

Learn More!

As you can see, there are many benefits to borrowing a federal student loan. For to learn more about federal student loans, refer to the many other informative articles on EdFed's website, or visit:


Article Title : Funding your Education with Federal Financial Aid: Federal Loans
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Working toward graduation was hard enouph for me. When I heard about consolidation I thought it was just one more thing on my list of things to do. EdFed made it easy for me when I got some information in the mail. I called in and had my application filled in and signed in 15 minutes. That's less ime than it takes me to walk to class!
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.

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Schools Will No Longer Receive Paper FAFSA Forms
(September 20, 2007)

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