Financing your education through Federal Student aid program

Most students opt for student’s loan either for their academic course of study or for their professional studies. However, for availing such loans there are two options available to them – firstly, they can get loans from private financial institutions and secondly, they can go for Federal students aid program. If you want to go for education loans with private financial institutions, you need to provide a guarantor for the loan. However, such a guarantor may not be required if you go for federal students aid program. This Federal aid program is in fact the largest source of student’s aid in US and provides over $80 billion per year in the form of loans, grants, and work-study assistance.

Several factors are taken into account while determining your eligibility for the Federal student aid program. This aid is mostly based on your financial need and is only intended to finance your education. To become eligible for the loan you should be a US citizen, have a valid social security number and should not be default on a previous Federal student loan. After you complete your graduation you get a grace period after which you need to start repaying your loan. This grace period is six months for a Federal or a Direct Stafford loan and nine months for a Federal Perkins loan. If you have received a Federal or a direct loan, you can choose from among the repayment plans. However, if you have received a Federal Perkins loan, there is only one repayment plan and you have to pay back the loan by this repayment plan only. Federal Perkins loan has to be repaid within a period of ten years only. Your monthly repayment will depend upon the amount of your loan and the time you take to repay back the loan.

The loan provider will provide you with all information about your repayment including the date from which your repayment begins. You should make regular repayment on your student’s loan once you repayment date starts else you will be considered delinquent as per the terms of the promissory note. Now once you become delinquent, the three credit reporting agencies may be reported about your delinquency which will be reflected in your credit report and lower your credit score. If credit score decreases, you may have problem getting loans at competitive rates for purchasing a home or a car. With a low credit score you may become ineligible for getting an additional federal student’s loan. Moreover, you can be sued to the court and judgment can be brought against you to recover the outstanding debt including late fees, through garnishment of your wages.