Students and families are often confused with the variety of options available when it comes to financing a college education. There are a myriad of options, from college scholarships and grants to federal and private student loans. As part of the Higher Education Act of 1965, President Lyndon Johnson created this law which was intended "to strengthen the education resources of our college and universities and to provide financial assistance for students in postsecondary and higher education." This increased all sources of federal funding provided to universities and added in grants and other forms of financial aid.
The Federal Stafford Loan is available to both undergraduate and graduate students enrolled at least half-time at a college or university accepting federal aid. This is a need-based program in which undergraduates may borrow up to $5,500 per year in subsidized funds based on academic level and graduate level students may borrow up to $18,500 per year (up to $8,500 in subsidized funds and the remainder in unsubsidized funds). The funds are sent directly to the school and are applied to the student's account. To ease the financial burden, payments are not required until six months after the student graduates. When looking to apply for a Stafford Loan, students should see what types of borrower benefits each lender is offering. As these student loans are all fixed at the same interest rate set by the U.S. Government, lenders are offering incentives to borrow by way of discounts, such as waived fees, rate reductions for early payment and cash back. While a Federal Stafford Loan is certainly a necessary start, it doesn't always cover the entire cost of education. A Parent PLUS Loan is a common way that parents contribute to their child's education. This credit-based loan allows parents to borrow the total cost of undergraduate education including tuition, room and board, supplies, college fees and more, minus any other aid received. Once the loan has been put into the student's account at the school, repayment begins shortly thereafter, at which time the student loan consolidation process can be performed. At a fixed interest rate, the Parent PLUS Loan is an easy and cost effective solution to help bridge the gap between Stafford Loan funding and the cost of education.
To be eligible for direct student loans, a student needs to attend the school that is participating in the direct loan program. Also, the student must be enrolling for at least on a part-time basis.
The two most common direct student loans are: (i) subsidized Stafford loan and (ii) unsubsidized Stafford loan. The subsidized loan has an interest subsidy and paid by the Government. Students who are awarded don't need to worry about paying interest and hence can concentrate on his or her study in full.
Not all students will receive subsidized direct loans (Stafford loan). Only those students with very few resources and with greater financial needs are qualified for subsidized loans. Students who are dependent, or have parents that are able to help pay for their schooling are usually given the unsubsidized direct loan which doesn't have an interest subsidy.
Private student loans have gained popularity over recent years as federal funding hasn't quite met the entire cost of education. There are many other costs associated with education, besides just tuition. Commuting students need to cover transportation costs somehow. City campuses don't always guarantee housing, which forces students to find an off-campus apartment, often with high rent costs. There are costly textbooks to purchase, lab supplies and flights home that aren't always covered by traditional financial aid. Private loans originate to students by a bank or other financial institution, unlike federal loans. Private student loans also offer similar benefits to students as a federal loan, such as deferred payment until graduation, different loan repayment terms, and borrower benefits. The interest rates on private loans vary from company to company and are, usually, on a basis of credit. Co-signers are a great way for a student who may have limited or no credit at all to get this loan. Because of the varying private loans available, most parents and families "shop around" until they find their ideal solution.
The Federal Stafford Loan is available to both undergraduate and graduate students enrolled at least half-time at a college or university accepting federal aid. This is a need-based program in which undergraduates may borrow up to $5,500 per year in subsidized funds based on academic level and graduate level students may borrow up to $18,500 per year (up to $8,500 in subsidized funds and the remainder in unsubsidized funds). The funds are sent directly to the school and are applied to the student's account. To ease the financial burden, payments are not required until six months after the student graduates. When looking to apply for a Stafford Loan, students should see what types of borrower benefits each lender is offering. As these student loans are all fixed at the same interest rate set by the U.S. Government, lenders are offering incentives to borrow by way of discounts, such as waived fees, rate reductions for early payment and cash back. While a Federal Stafford Loan is certainly a necessary start, it doesn't always cover the entire cost of education. A Parent PLUS Loan is a common way that parents contribute to their child's education. This credit-based loan allows parents to borrow the total cost of undergraduate education including tuition, room and board, supplies, college fees and more, minus any other aid received. Once the loan has been put into the student's account at the school, repayment begins shortly thereafter, at which time the student loan consolidation process can be performed. At a fixed interest rate, the Parent PLUS Loan is an easy and cost effective solution to help bridge the gap between Stafford Loan funding and the cost of education.
To be eligible for direct student loans, a student needs to attend the school that is participating in the direct loan program. Also, the student must be enrolling for at least on a part-time basis.
The two most common direct student loans are: (i) subsidized Stafford loan and (ii) unsubsidized Stafford loan. The subsidized loan has an interest subsidy and paid by the Government. Students who are awarded don't need to worry about paying interest and hence can concentrate on his or her study in full.
Not all students will receive subsidized direct loans (Stafford loan). Only those students with very few resources and with greater financial needs are qualified for subsidized loans. Students who are dependent, or have parents that are able to help pay for their schooling are usually given the unsubsidized direct loan which doesn't have an interest subsidy.
Private student loans have gained popularity over recent years as federal funding hasn't quite met the entire cost of education. There are many other costs associated with education, besides just tuition. Commuting students need to cover transportation costs somehow. City campuses don't always guarantee housing, which forces students to find an off-campus apartment, often with high rent costs. There are costly textbooks to purchase, lab supplies and flights home that aren't always covered by traditional financial aid. Private loans originate to students by a bank or other financial institution, unlike federal loans. Private student loans also offer similar benefits to students as a federal loan, such as deferred payment until graduation, different loan repayment terms, and borrower benefits. The interest rates on private loans vary from company to company and are, usually, on a basis of credit. Co-signers are a great way for a student who may have limited or no credit at all to get this loan. Because of the varying private loans available, most parents and families "shop around" until they find their ideal solution.
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