What is a Government Student Loan?

These loans work much like other student loans, except that they have different repayment terms. A Stafford loan, for example, is not credit based and payments can be deferred until after graduation. Subsidized loans do not accrue interest while the student is in school, while unsubsidized loans do continue to accrue interest. For students who demonstrate financial need, the likelihood of receiving subsidized loans increases. This helps keep Stafford loans as one of the first government student loans that a prospective student should apply for.

PLUS loans are similar to unsubsidized Stafford loans but are intended for post secondary education. These loans are credit based but offer the same deferment and forbearance options as the Stafford loans, meaning that they need not be repaid until after graduation as long as a student is at least enrolled half time in a degree program. There are two types of PLUS loans, Parent PLUS, which uses a parent’s credit and signature, and Graduate PLUS that uses the credit rating and signature of a graduate student. Both are very popular government student loans, and can be highly beneficial to a student seeking a post-secondary education such as law school or medical school.

The last loan is a Perkins loan. These loans are given by the school itself, but using government funds. These are low interest loans that are intended for students who exhibit financial need. Students enrolled at least half time have nine months after graduating, dropping out, or otherwise leaving school to begin repayment, and the amount of time given to repay the loan can be up to ten years.

For many students, government student loans are the best solution. These loans allow a student to attend college and devote their time to studies without having to worry about making loan payments during their schooling. While these are still loans and must be repaid, the terms are much fairer and more flexible than other types of loans, and these loans are specifically designed to help students obtain the degrees needed to have successful careers for the rest of their lives.