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Guaranteed Student Loans

About Guaranteed Student Loans Guaranteed student loans are loan programs which are offered to the students but are backed by the federal government via the Department of Education of the United States. These could be loans which are being offered by private organizations, individuals, and/or other financial intermediaries. Since private student loans are hard to get without a cosigner and a good credit history, which students most often cannot provide, the government initiated the program of guaranteed student loans where the loan withdrawn by a student from a private source could be guaranteed by the government. That is, if in case the student fails to pay back the loan amount, the government of United States will pay the private financial intermediary on the behalf of the student. This way, students get private loans easily and it is less risky for the private financial intermediary as well.

Who Offers Guaranteed Student Loans

Guaranteed student loans are offered by the government as well as private lenders. Guaranteed student loans offered by the government include Subsidized Stafford Loans. These were initially known to be guaranteed student loans; however, due to the generic term being used, the name was later replaced to Stafford loans as the government was also backing private loans with the same name. Government was initially offering a number of guaranteed student loans. However, they were reduced to one under the title Subsidized Stafford Loans. It is important for students to understand that all Stafford Loans are not backed by the government. Unsubsidized Stafford loans do not fall in this category.
Federally backed student loans offered by the government, Subsidized Stafford loans, is a loan program where the government pays the interest rate on the loan amount for the time the student is enrolled in the course of education and the student does not have to worry about any payments during the duration of education. The federal government does it on their behalf. Whereas, once the student has graduated and completed their education, they are liable to pay the entire amount back to the government.