Federal Student Financial Aid

Written by Mark Sanfilippo
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One of the best ways for prospective students to overcome the financial barrier of higher education is by making use of Federal Direct Student Loans. These types of loans that are offered by our Federal government are generally low interest and they have generous repayment schedules. Some of them even eschew accrued interest altogether, at least while the student is still in school.

Subsidized Stafford Federal Student Loans actually eliminate interest altogether as long as the student is attending school at least part time. This is a wonderful way to keep your student loans down at least while you are in school. Other types of Federal Student Loans are offered at Federally mandated interest rates which are currently the lowest they have been in 37 years.

Say you've taken advantage of Federal Direct loans. Maybe you have four Federal Direct loans, each with a different locked in interest rate. You are now eligible to consolidate your various loans into one lump sum loan. This is akin to refinancing your home to some degree in that it allows you to lower your monthly payments by locking in a currently lower interest rate.

Consolidating Is Not Cheating

To some the consolidation process sounds suspect. The truth is that consolidation is perfectly legal and can be a great way to reduce you monthly payments. A reduction in monthly payments can free up excess cash and allow you a greater level of financial freedom. Having your monthly gross income to debt ratio reduced can also help make you more eligible for home and car loans.

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