Fixed Rate Student Loan

Fixed rate student loans make higher education possible for students who want to grow intellectually but who need help affording concentrated full-time academic study. These borrowed funds guarantee that tuition costs will be paid per semester in exchange for a promise to pay back that money later. "When thou vowest a vow unto God, defer not to pay it; for he hath no pleasure in fools: pay that which thou hast vowed" (Ecclesiastes 5:4). The same goes for even earthly debts. Before borrowing, students should exercise caution. It may be the first time they have ever tried to borrow. It isn't free money; lenders should be chosen carefully and the amount of the fixed rate student loan should not exceed exactly what is needed. A fixed rate student loan generally has lower interest rates than a conventional one. Shopping around for the lowest interest will help educate students on how lending and credit ratings work, plus relieve them of unnecessary costs after graduation.

The federal government makes some fixed rate student loans possible, such as the Federal Stafford; for parents to pay for their child's tuition, books, and college living expenses; and federal consolidation. Most will require a FAFSA form (Free Application of Federal Student Aid). The benefit of the fixed rate student loan is that the government pays the interest on it until graduation; repayment begins 6 months later or when the academic load is below half-time. Parent Loans for Undergraduate Students (PLUS) can be used with or without a Stafford up to the total cost of the education not yet covered by other options. If a student has several fixed rate debts for multiple years of school, these can be consolidated into one debt that can sometimes be repaid over the course of 30 years. This has an added benefit of locked in rates, no penalty for prepayment, and multiple discounts. However, if you extend your repayment that long, the total amount of interest paid will also be higher.

A private fixed rate student loan is also available but this usually has a higher interest rate (because they are not federally secured) and may require a co-signer with good credit. Even during deferment, interest still accrues (unlike federal ones) so private alternative options are best used as supplements. All lending options are reviewed and processed by the institution of attendance. The financial-aid package may include grants, scholarships, and work-study eligibility in addition to fixed rate student loans. Since 1965, when the Federal Family Education Loan Program (FFELP)was created by Congress, the public and private sector has worked together to administer low-cost fixed rate student loans to more than 50 million Americans, making a university degree an affordable dream for all.


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