About Guaranteed Student Loans
Guaranteed Student Loans are loans that are provided to borrowers from a lender under the insurance of the federal government. The federal government takes on the responsibility for these loans and makes sure that the loan is repaid on agreed terms. These loans were issued to students from private lenders through the Federal Family Education Loan Program; however, beginning on July 1, 2010, all federal loans are disbursed directly through the Department of Education as controlled by the Federal Direct Lending Program. To stress the point: federal loans are no longer offered through a third party lender. As a result of the change to 100% direct federal loans, the idea of a guaranteed student loan is now obsolete, unless the loan was taken out before July 1, 2010. When Guaranteed Student Loans were offered, Stafford Loans and PLUS Loans for parents and graduate students were included among offered Guaranteed Student Loans.
Stafford Loans were a type of Guaranteed Student Loans that can be subsidized or unsubsidized. Stafford Loans are now offered directly by the federal government. In the case of subsidized Stafford loans, they are given out based on financial need and the federal government pays the interest on behalf of the student while he/she is still in school. One of the best things about this type of Guaranteed Student Loan is that it requires no credit check. Unsubsidized Stafford Loans, on the other hand, are not based on financial need, so they can be given to any student. The student is responsible for all of the interest accrued while he/she is in school. Both of these Guaranteed Student Loans have a fixed rate of interest. You can repay the borrowed amount in 10 years; however, in certain cases, the payback period may be extended up to 25 years. Students have a 6 month grace period after graduation before repayment starts.
PLUS Loans were another kind of Guaranteed Student Loans available for parents of students who enrolled in undergraduate programs. PLUS loans are still available, but are now offered directly through the federal government. They are also available to graduate students. Like Stafford loans, these loans have a fixed rate of interest. The parents and graduate students start to repay the borrowed amount after the loan has been fully disbursed. However, they may have the option to defer repayment of the loan while the student is enrolled at least half-time.
Q:Should I apply for guaranteed bad credit private student loans?
A:You should try to avoid guaranteed bad credit private student loans, as these loans are predatory in nature and come with terms and conditions that do not favor the students in any way. Students should exhaust their federal options first before applying for private loans.
Q:What are guaranteed student loans?
A:Calling a loan a "guaranteed student loan" means that the government pays off the interest. Previously, Stafford loans were called guaranteed loans, but since many other loans can be described in the same way, the name was changed.
Q:How can I get guaranteed student loans with bad credit?
A:Finding guaranteed Student Loans with bad credit was not all that difficult until last year. As per modifications in the structure of loans offered by the government, guaranteed student loans do not exist anymore. All sorts of student loans offered by the government are disbursed under the Direct Loan Program by the US Department of Education, meaning there is no longer a third party involved in the lending process and thus the loans do not qualify as guaranteed loans anymore.
Q:I have guaranteed student loans without cosigner that were offered by federal authorities before 2010. What are the implications of this act on my loan?
A:All the previously disbursed guaranteed student loans without cosigner before the 2010 act will keep operating as they were. The change is brought in effect to new loan disbursements only. You will continue to make your loan payments as scheduled. The previously issued guaranteed student loans remain unaffected with this amendment.