There are many student loan options that are available to college students to ease the sting of the currents costs of college tuition and other related fees. These loans are both private and federally subsidized. Here is your student loan navigation guide.
The Stafford Loan is the main federally subsidized student loan. There are two types of Stafford Loans. The Federal Family Education Loan Program (FFELP) is funded by a private lender. Examples of these private lenders include banks and credit unions.
The Federal Direct Student Loan Program (FDSLP) is also called a “Direct Loan. These loans are administered by “Direct Lending Schools: and are given by the United States government directly to college students and their parents.
A Stafford Loan is either subsidized or unsubsidized. With a subsidized loan, the government will take care of the interest while you are attending school. With an unsubsidized loan, you are responsible for all of the interest incurred. However, the interest payments are deferred until after you graduate.
In order to qualify for a subsidized Stafford Loan you must be able to show financial need. More than two thirds of those who qualify for the Stafford Loan had a total family Adjusted Gross Income (AGI) of $50,000 or less.
With the unsubsidized Stafford Loan, all students are eligible to acquire the loan regardless of financial need. Repayment of the unsubsidized loan begins six months after you drop below half-time enrollment.
The Perkins Loan is given to undergraduate and graduate students with significant financial need. With this loan, the school is the lender using funds that are provided by the government.
The Private Education Loan which is also known as the Alternative Education Loan helps pick up the slack between the cost of a college education and the amount that the government will allow you to borrow.
Private loans are of course provided by private lenders and are generally dependent upon your credit score, similar to applying for a credit card. Wells Fargo and Discover are examples of the many private lenders that there are out there. Just about every bank and credit card company offer student loan options.
If these options do not cover the amount of the student’s tuition, the parents of the dependent student has the option to take out a loan as a supplement. This loan is called the Parent Loan for Undergraduate Students of PLUS. The parent can borrow up to the full cost of college attendance. The PLUS loan is federally subsidized.
The PLUS loan is the complete responsibility of the parent. The student may choose to make payments on the loan however, if the student makes a late payment or even fails to make a payment, their parent does in fact bear the consequences.
Last but not least, there are loans that are available for graduate and professional level students. The Graduate and Professional Student PLUS Loan or “Grad PLUS” is very similar to the Stafford and Parent PLUS Loans. The only difference is it is for graduate and professional level students.
To apply for all federal loans, simply fill out a FAFSA online. The loan paperwork is sent to each college that the student is applying to. For private loans, you simply go directly to the bank or credit company.
