About Federal School Loans
There is a lot of information that you need to know about federal school loans before you make any agreement on a program. These loans are helpful in supplementing whatever financial aid you have, but you should be aware from the very beginning that they have to be repaid in full. If you are unable to repay the loans, for nearly any reason, you can find yourself in grave financial trouble. Federal school loans are held by the very same people who can take money out of your paycheck each month before you ever see a cent, the federal government.
Not repaying these loans can result in the government taking money from your paychecks to repay the loans, taking you to court to demand immediate repayment and stripping you of your annual income tax refund. Considering the seriousness of this financial decision, you may want to do a little research on federal school loans before you enter the financial aid office.
Subsidized vs. Unsubsidized
There are two major types of federal school loans: subsidized and unsubsidized. Subsidized loans are issued according to your financial need, academic level and major. As you increase your academic level and keep your grades up to standard, your loan amount will increase.
This decreases your need for supplemental loans that may not be subsidized. Subsidized federal student loans enter repayment six months after you drop below half time enrollment, drop out or graduate. Unsubsidized loans are basically your standard student loan. Unlike subsidized loans, these loans gather interest from the moment they are disbursed until you have repaid the loan in full. The loan amount, though, still depends on your academic level and progress.
Repaying Federal School Loans
Once you have dropped below half time, dropped out or graduated, you will have six to nine months of grace period before you have to begin repaying your federal school loans. You are required to make on time payments until the loan is completely paid off. Should you fail to make on time payment, you will be faced with late fees, collections notifications, collections calls, delinquent or default status on your loans. All of these have a negative impact on your credit record which can result in your being unable to qualify for a loan for a home or car. |
