Federal student loans are guaranteed by the U.S. Federal Government and may have lower interest rates or fixed interest rates. There are multiple repayment plans and no prepayment penalties.
Default occurs if you fail to make payments on time. Once a student loan goes into default the full balance of the loan becomes due – immediately. It also means that other options for delaying payment, including student loan deferment and forbearance, are no longer available.
The three most common types of loans are:
While there are no absolute ways to determine which student loan programs are best there are some general guidelines.
There are two different types of Federal Stafford Loans: (i) subsidized, (ii) unsubsidized.