4 Essential benefits of taking out a federal student loan
If you do not have enough funds to complete your education, you can take out a federal student loan. It is one of the best ways to pay for your education. You may try to cover your student education with the help of free financial aids such as grants, scholarships and personal savings that do not need to be repaid but sometimes these loans are unable to cover all the necessary college costs. This article provides you with information about the benefits of taking out a federal student loan.
Benefits of federal student loan
Some students may think that they can get rid of the hassle and save money by putting their college debts on their credit cards but they must realize that this is not the best option. Taking out a student loan can actually save you a lot more money. Here are some benefits you may receive when you decide to take out a federal student loan.
1. Interest rates are fixed – One of the most important benefits of taking out a federal student loan is that the interest rates are fixed on this kind of loan. Thus, payments on your federal loans will not increase even though there may be a hike on the interest rates.
2. Insurance – When you take out a federal student loan, the government offers you an insurance policy for free. Thus, if you die or if you are disabled, your loans are canceled.
3. Defer payments – The government allows you to defer payments while you are attending school. However, you must keep in mind that a deferment on your federal student loan would mean that the government may keep on adding more interest on two kinds of loans. These loans are Stafford loans and Grad PLUS. Thus, though you may not be charged penalties or fines, yet your interest rate may keep on increasing.
4. Low-paying or public service job – If you have chosen to go for a low-paying or public service jobs, you are allowed to choose monthly payments that match your low income. In order to secure this opportunity, you need to apply for Income-Based Repayment. After enrolling into this program, you may need to pay only 15% of your income instead of a paying a fixed payment towards your student loan.
Thus, apart from providing you with funds to complete your education, taking out a federal student loan can provide you with various other benefits. Thus, you can take out a federal student loan if you are finding it difficult to pay for your education and ultimately resolve the financial crisis you are in.
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