Guaranteed Student Loans

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
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
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.