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15 Advantages Of Federal Student Loans That You Must Know

When it’s time to begin preparing for college, students must consider all types of financial assistance.

Whether you choose a federal loan or a private lender loan, there are advantages and drawbacks to consider.

Today we’ll talk about 15 advantages of federal student loans that students should know.

15 Advantages Of Federal Student Loans

1. There Is No Need to Have Good Credit to Get a Federal Student Loan

Federal student loans do not require a credit history, although most other loans from financial institutions (such as a bank or credit union) do.

The Free Application for Federal Student Aid (commonly known as the FAFSA) must be completed by the parents of a student to apply for a federal student loan.

It’s supposedly simpler to be accepted for a federal student loan if the student is a dependent.

The majority of private lenders demand a good credit score (at least 670 on a scale of 300 to 850 used by FICO) which is the most recognized credit score. To qualify for the loan, you’ll need a co-signer with an excellent credit score and a consistent income.

2. A Co-Signer Is Not Necessary For Federal Student Loans

Federal student loans are unsecured, non-recourse loans that aren’t based on credit, which college counselors say allows the borrower to assume responsibility without requiring a family member or friend to co-sign.

Almost all students are not eligible for a private student loan without a co-signer. A student with a lot of credit in their name and employment may qualify.

3. Federal Student Loans Has a Fixed Interest Rates

The interest rates on federal student loans are identical throughout the life of the loan. Variable or fixed interest rates can be found on private loans.

According to experts, one of the main benefits of a fixed-rate loan is that the borrower is protected from large or sudden rises in monthly payments if interest rates rise.

If you want to take out private student loans, it’s usually preferable to use up your federal student debt first since they come with income-driven repayment options and forgiveness programs.

4. You Can Start Paying Interest After College

Interest-free federal student loans are available to qualifying students who attend school full-time. They do not have to pay interest while they study.

When these situations arise, the government typically pays the student’s interest.

5. Federal Loans Have Forbearance and Deferment Options

The federal government’s student loan program allows you to apply for forbearance or deferment. Both of these are accessible under the federal student loan program.

You typically have up to 3 years on federal student loans, and private lenders generally give 1 year of forbearance or deferment unless there are different terms and conditions in the promissory note.

During deferment, the United States Department of Education pays interest on subsidized federal loans.

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6. Federal Loans Have a Grace Period for Repayment

Borrowers of federal student loans are not required to begin repaying their debts until after they have obtained their degrees or fallen below half-time enrollment.

After 6 months have passed, students who leave college, whether by completing or withdrawing before graduation (or otherwise), must repay.


Before July 1, 2010, students who took out direct subsidized or unsubsidized Stafford Loans had the option of deferring interest charges while still enrolled in school.

You should be aware that interest starts to accrue during the grace period after they graduate.

The interest on a subsidized loan is paid during the grace period by the Department of Education.

7. Income-Driven Repayment Solutions Only for Federal Loans

In 2009, the federal government implemented Income-driven Repayment, which is more generous than the previous income-based repayment system.

Simply the government calculates when and how frequently you must repay your student loan based on your family size and income.

Income-driven plans are useful for individuals who have exhausted unemployment benefits and other deferment possibilities.

Even though there are certain situations when forgiveness is not accessible, many experts believe that there will be plans for various financial situations.

In reality, the federal student loan program offers four distinct income-driven repayment alternatives.

These repayment alternatives may be an option for borrowers after the payment pause and interest waiver has ended.

8. It Will Take You Longer to Default With Student Loans

Borrowers who are having difficulties repaying their student loans can apply for forbearance, which allows them to postpone payments while they work out a solution.

Even if they have missed 3 or more payments, federal student loans can be extended by an additional 6 months.

A federal student loan is only considered delinquent after three missed repayments of 9 months or more, which is typically long past the due date.

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9. You Can Consolidate Your Student Loans (Even If you Have Bad Credit Score)

Borrowers with multiple federal student loans can have them consolidated into a single direct loan with a single monthly payment.

It’s easier to consolidate with the federal government. If refinancing several loans at once, you may end up spending more on fees over time.
Joshua Smith

10. Student Loans Can Be Discharged

Do you know that if the borrower dies, the loan is immediately canceled and the debt is wiped away by the government!

Also, federal student loans that can be forgiven if the borrower qualifies for total and permanent disability status.

Private student loans are no longer the only ones that provide this coverage, and private lenders continue to lend and offer a large list of loan protections.

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11. You’ll Have Student Loan Forgiveness Solutions

Some student loan repayment programs provide forgiveness possibilities.

The Public Service Loan Forgiveness program is a revolutionary way to pay off your student loans.

It allows you with at least 10 years of public service under your belt and 120 monthly payment plans in place-to have those pesky debts forgiven!

After 20 or 25 years, borrowers who have been enrolled in an income-driven repayment plan may be eligible for loan forgiveness too.

However, the IRS considers forgiven debt to be taxable income under an income-driven repayment plan.

12. There Is No Established Limits on Parents’ Borrowing

There is no restriction on the amount of money parents can borrow when taking out a Parent plus loan, They might also be eligible for funding through the Stafford Loans program.

A private loan may be used to cover a gap between the amount of financial assistance received by a student and the cost of college.

The amount of money available for tuition may be as much as the rest of a student’s college expenses, which are determined by his/her school.

13. It’s Simple to Get a Federal Student Loan

You can apply for a private loan, and It’ll take anything from 2 to 10 weeks for you or your institution to acquire the cash after your application is approved.

In case you take a federal student loan: It takes approximately 1-3 weeks to process the FAFSA and create a financial aid package that is specific to your requirements.

And The majority of individuals qualify for federal student loans, although those with the greatest financial need can usually get them at the best rates.

To give a better understanding of this topic, consider these 3 most significant reasons why you might be rejected:

  • You’re not making enough academic progress at your school.
  • You’ve defaulted on a prior student loan.
  • You’re in a study course that forbids you from receiving financial aid.

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14. There Is Student Loans Incentives

Borrower incentives are a standard method for financial institutions and other lending organizations to attract clients.

Student loans are frequently a top target of such incentive programs, and they may help student borrowers save money on their private lender loan applications and approvals.

Ant the most common 3 incentives:

  • When borrowers enroll in automatic payment plans, they may save money on their interest rates.
  • Borrowers who make timely and complete payments for a set length of time will get interest rate reductions.
  • Origination fees are sometimes waived by lenders.

15. Student Loans Can Mean the Difference Between an Average Collage and Your Dream Collage

Imagine that your parents saved money to pay for 4 years of education. If the collage offers the courses you want to take and fits within your budget, fantastic! You may complete college debt-free.

But what if you’ve always wanted to attend another collage or another private institution, and your parents are opposed?

You’ve been accepted, but your parents were unable to save enough money for the whole sum.

You’d be stuck paying $40,000 in other ways, most likely a combination of financial aid and student loans.

Because student loans are available, you have the option to choose:

  • Graduate debt-free from an average collage
  • Or go to your ideal collage and borrow money for tuition.

You may still get an education without student loans if you had no other option. You would have been compelled to attend a college that you could afford on your own.

Frequently Asked Questions

What are the advantages of student loans?

1. There Is No Need to Have Good Credit to Get a Federal Student Loan
2. A Co-Signer Is Not Necessary For Federal Student Loans
3. Fixed Interest Rates For Federal Student Loans
4. You Can Start Paying Interest After College
5. Forbearance and Deferment Alternatives are Available
6. A Grace Period for Repayment
7. Income-Driven Repayment Solutions
8. It Will Take You Longer to Default With Student Loans
9. You Can Consolidate Your Student Loans (Even if you have bad credit score)
10. Student Loans Can Be Discharged
11. You’ll Have Student Loan Forgiveness Solutions
12. There Is No Established Limits on Parents’ Borrowing
13. It’s Simple to Get a Student Loan
14. There Is Student Loans Incentives
15. Student Loans Can Mean the Difference Between an Average Collage and Your Dream Collage