EastudyMasters logo
picture

Find My School

 
 
 
 
 
 
Federal Student Loans
The obvious question that one can think before applying in college - about the financial aid and costs. The colleges are so expensive but there is some way out in this process. People can go for college financial aid. There are several set ups that can help you. Getting as much of the information as you can about these various types of college financial aid will help you to secure your future. To get financial aid first applies in college then, you can work with counselors to determine just what options are available to you.

Once you apply for financial aid and figure out your eligibility for various aid programs then you may have a few options to choose from. For example, you may qualify for grants. Other options are subsidized loans that offer very low interest rates. These are the next best thing to consider. If someone wants to know about college financial aid, seeking the advice of the financial aid counselor at the college you plan to attend is the best way.

Few people nowadays can afford the bill for an entire college education from their own pockets, for that reason taking out a loan can help to shoulder the rest of the financial burden. Most students’ loans don't require that the borrower begin making payments until after exam, hopefully after you've secured a good job. There are few major types of student loans —Stafford, Perkins, Plus and Direct loans.

Stafford loan is federally based and do not require credit checks or any form of collateral for the student to apply for. Government loans such as these can offer low interest rates as well as repayment deferment plans to allow you more flexibility. Stafford loans come in two forms — Federal Family Education Loans, which are provided through private lenders such as banks, credit unions, and loan associations; and Federal Direct Student Loans which are provided directly from the government to your college. Stafford loans can either be subsidized meaning the government pays your interest while you're in school, or unsubsidized meaning you pay the interest. Stafford Loans are loans that are guaranteed by the government. There are versions of the loan available for both undergraduates and graduate students, available in varying amounts and under a number of different circumstances and criteria that are met.picture

Stafford Loans come in two varieties: the subsidized Stafford Loan and the unsubsidized Stafford Loan. The former is a rarer offering, made to those who present extreme financial hardship based on completion of the FAFSA. If you qualify for a subsidized Stafford Loan, this means that you will not have to pay interest on this portion of your college funding. When the loans come due, you will simply begin to repay the principal, with all interest having been repaid to the actual lending source by the federal government. Much more commonly, the federal government approves unsubsidized Stafford Loans, in which the student will be responsible for the interest on the loan. However, students are not obligated to begin repayment of any portion of the loan until a six-month grace period beyond graduation has ended. While accruing interest, these loans are guaranteed to have low interest rates that accommodate the budget, as the primary goal is to help students achieve their goals of pursuing a higher education with a secondary focus on profiting from the loan.

Several private agencies can help you fund a Stafford Loan with extremely low interest rates, including SunTrust, Wachovia, and Bank of America. You can also work with the government-appointed institution in the state where you will be attending college to receive Stafford Loans funded by state tax exempt bonds, helping you to save even more on the cost of your loans. You may also be able to get incentives such as interest cuts for continuous on time payments or direct withdrawal payments.

Perkins loan is federally based and do not require credit checks or any form of collateral for the student to apply for. Perkin loan is a low-interest (5 percent) federal student loan for students with exceptional financial need. Perkins loans are usually reserved for those with exceptional financial need. Your school will act as your lender, using funds provided by the government. Perkins loans are subsidized, with no interest being paid while you are in school and also for a nine month grace period afterward. Federal Perkins Loans is made through a school's financial aid office. Your school is your lender, and the loan is made with government funds. You must repay this loan to your school. Your school will either pay you directly (usually by check) or apply the loan funds to any school charges that you have. The loan will be disbursed in at least two separate payments during the academic year. The annual limit for the Federal Perkins Loan program is $6,000 for Graduate and professional degree students, with a lifetime limit $40,000 for graduate or professional degree students. A standard Perkins Loan will have a repayment period of approximately 10 years, though extreme hardship may warrant a lengthening of terms. Since the loan is disbursed directly through the college you attend, you may want to contact the financial adviser at the college regarding a deferment or lengthening of your terms.

PLUS loans are slightly different in that they can be taken out by the family of the student to supplement any aid the student might be receiving. They are slightly less advantageous than the student-based loans in that they do require credit checks and don't come with the grace periods that Stafford and Perkins loans provide. Graduate and professional students who are applying for a PLUS loan must submit the FAFSA and sign a master promissory note.

Parents who are applying for a Parent PLUS loan are, strictly speaking, not required to have the student file a FAFSA. However, it is generally advisable to do so in order to avoid missing out on other federal student aid. But if they wish to apply for a Parent PLUS loan without submitting a FAFSA, they will need to submit a loan application and sign a master promissory note. Starting in 2011-2012, the FAFSA will be required for the Parent PLUS loan.

PLUS loans through the Direct Loan program have a fixed interest rate of 7.9%.The 7.9% interest rate on the Direct PLUS loan is a lower interest rate than the interest rate that was available through the FFEL program, which had a fixed rate of 8.5%.So the switch to Direct Loans will save parents some money on new Parent PLUS loans.