College or university is a huge financial burden, and if you’re planning to continue your education, you’re probably already feeling stressed out at the thought of funding. It’s estimated that the average course at a public university costs $26,290, which means for many people, studying at university without financial support is impossible.
If you’re looking into furthering your education, you’ll have a choice between two supportive loans: a private student loan or a federal loan. Private student loans are issued by an independent lender, like a bank, whereas federal loans are issued by the government. You might have to start paying back your private student loan while you’re still in education, but federal loans only come into place once you’ve graduated from university.
Here are 6 reasons to apply for a federal loan:
- You don’t need good credit
Almost every other loan you can apply for, including mortgages and bank loans, will take a look at your credit history before they give their approval. Federal student loans are different; your credit history is irrelevant, and it won’t make a difference if you have a low credit score.
- You can apply alone
Lots of loans dictate that you enlist in the support of somebody called a co-signer, who will promise to pay the loan should you fail to. A federal student loan will allow you to take on the responsibility alone without a family member or friend to back you up.
- Your interest rates won’t change
With a federal student loan, you’re guaranteed to have fixed interest rates that won’t change for reasons that our out of your hands. This puts them apart from private loans, which have far more variable interest rates.
- Can defer if you need to
One of the biggest advantages of federal student loans is that if you find yourself in a period of financial instability, you can defer your loan for a certain amount of time while you get back on your feet. It may be more difficult to do this with an agreed private loan.
- Guaranteed cancellation if you die
It’s not something many of us want to consider, but it should be reassuring to know that federal loans are immediately cancelled if the person making the repayments dies. In some private loan situations, the payment falls onto the co-signer.
- Won’t default if you’re late to pay
Private loans take a missed or late payment very seriously. You’ll end up damaging your credit, and might even be sued by the loan provider. Federal loans, on the other hand, are a lot more lenient if you’re late to make a payment, and will give you more time to recover – up to three months, to be exact.
Ready to start the application process? Give yourself some time to read up on how to apply for federal student loans before you get going, and familiarise yourself with everything you’ll need to make the process easier. Ask for help from your school or parents if you’re unsure about anything. It’s easier to get everything right the first time around than to have to repeat parts of the process.