Sunday, March 13, 2011
Student Loans
Beginning July 1, 2010 all federal student loans (Stafford, PLUS and
consolidation loans) are provided only by the US government through what is
called the "Direct Loan Program."
All lending from the bank-based Federal Family Education Loan Program
(FFELP) will be transferred to the Direct Loan Program. Private banks will no
longer lend government-backed loans to students.
Every student applying for federal student loans will do so through their
college or university (contact your FinancialAid office to learn how).
consolidation loans) are provided only by the US government through what is
called the "Direct Loan Program."
All lending from the bank-based Federal Family Education Loan Program
(FFELP) will be transferred to the Direct Loan Program. Private banks will no
longer lend government-backed loans to students.
Every student applying for federal student loans will do so through their
college or university (contact your FinancialAid office to learn how).
There are two sources for student loans -- the federal government and private
lenders. In order to obtain most federal student loans, you will first need to
file the Free Application for Federal Student Aid (FAFSA). In most instances the
FAFSA is required for all federal financial aid including federal student loan
lenders. In order to obtain most federal student loans, you will first need to
file the Free Application for Federal Student Aid (FAFSA). In most instances the
FAFSA is required for all federal financial aid including federal student loan
You can learn the ins and outs of each at their respective pages on this
site. The Federal Stafford loan is made in the name of the student, is based on
need (only the subsidized portion), does not require a credit check (it's
guaranteed by a private guarantor and backed by the government rather than
credit/income/assets, etc.) and does not have to be repaid until after the
student graduates, leaves school or stops attending on at least a half-time
basis. Some schools offer Stafford loan directly through the federal government.
These are commonly known as Direct Stafford Loans. The schools that offer Direct
Loans are known as Direct Lending Schools. Other schools offer Stafford loans
through banks or other lenders. These schools are commonly called FFEL schools
(Federal Family Education Loan). In order to obtain a federal Stafford loan
through a FFEL school, you will need to choose a lender.
site. The Federal Stafford loan is made in the name of the student, is based on
need (only the subsidized portion), does not require a credit check (it's
guaranteed by a private guarantor and backed by the government rather than
credit/income/assets, etc.) and does not have to be repaid until after the
student graduates, leaves school or stops attending on at least a half-time
basis. Some schools offer Stafford loan directly through the federal government.
These are commonly known as Direct Stafford Loans. The schools that offer Direct
Loans are known as Direct Lending Schools. Other schools offer Stafford loans
through banks or other lenders. These schools are commonly called FFEL schools
(Federal Family Education Loan). In order to obtain a federal Stafford loan
through a FFEL school, you will need to choose a lender.
Federal PLUS loans are made in the name of a parent. While they do require a
credit check, the credit criteria to obtain a PLUS are generally not as
stringent as they are for other types of consumer loans since they are based on
Federal requirements. Repayment of a PLUS loan begins after the loan is fully
disbursed. PLUS loans disbursed on or after 7/1/2008 may have payments postponed
while the student is in school at least half-time, however interest is still
accruing. Be sure to read your loan disclosure and contact your lender if you
would like to postpone the payment on your PLUS loan. Again, some schools offer
PLUS through the federal government and others offer it through banks or other
lenders.
credit check, the credit criteria to obtain a PLUS are generally not as
stringent as they are for other types of consumer loans since they are based on
Federal requirements. Repayment of a PLUS loan begins after the loan is fully
disbursed. PLUS loans disbursed on or after 7/1/2008 may have payments postponed
while the student is in school at least half-time, however interest is still
accruing. Be sure to read your loan disclosure and contact your lender if you
would like to postpone the payment on your PLUS loan. Again, some schools offer
PLUS through the federal government and others offer it through banks or other
lenders.
The Federal Graduate PLUS is just like the PLUS for parents except that it is
made in the name of a graduate or professional student. However, the student
must apply for the maximum annual limit of the Stafford Loan before applying for
the Graduate PLUS. It is important to remember that the Federal Graduate PLUS
requires payment within 60 days after the loan is fully disbursed. Deferment
options are available while you are still attending school at least half-time.
Check with your financial aid office. (Note: Servicers usually will
automatically place Grad PLUS loans in deferment).
made in the name of a graduate or professional student. However, the student
must apply for the maximum annual limit of the Stafford Loan before applying for
the Graduate PLUS. It is important to remember that the Federal Graduate PLUS
requires payment within 60 days after the loan is fully disbursed. Deferment
options are available while you are still attending school at least half-time.
Check with your financial aid office. (Note: Servicers usually will
automatically place Grad PLUS loans in deferment).
Federal loan consolidation is for student borrowers who are in repayment
status or parent borrowers who wish to extend the repayment period on their
current PLUS loans and obtain a fixed interest rate for those loans which might
have a variable interest rate. You can combine all of your eligible federal
student loans into one loan with a Federal Consolidation Loan. Consolidating
also locks the interest rate you pay on your loan. In addition, by consolidating
you can possibly lower your payments by extending the length of the repayment
period for your loan. However, with the extended term, you will end up paying
more in interest over the life of the loan.
status or parent borrowers who wish to extend the repayment period on their
current PLUS loans and obtain a fixed interest rate for those loans which might
have a variable interest rate. You can combine all of your eligible federal
student loans into one loan with a Federal Consolidation Loan. Consolidating
also locks the interest rate you pay on your loan. In addition, by consolidating
you can possibly lower your payments by extending the length of the repayment
period for your loan. However, with the extended term, you will end up paying
more in interest over the life of the loan.
If federal loans are not enough to cover your educational expenses, or if you
want a loan that is in the student's name, there are private student loans (sometimes called alternative
student loans). Private loans are made by banks and other lenders. They must be
used solely for education expenses. They do not carry the federal benefits which
FFELP and Direct Loans offer and the interest rates can be higher than federal
loans. In addition, you will need good credit and most students will need a
qualified co-signer in order to obtain a private loan. Also, while interest
rates, fees and other loan program terms are competitive, they vary widely from
lender to lender. It is important to compare your options before choosing a
private loan. Once you have found a loan that meets your needs, you can usually
apply online and in many cases get an instant decision on approval.
want a loan that is in the student's name, there are private student loans (sometimes called alternative
student loans). Private loans are made by banks and other lenders. They must be
used solely for education expenses. They do not carry the federal benefits which
FFELP and Direct Loans offer and the interest rates can be higher than federal
loans. In addition, you will need good credit and most students will need a
qualified co-signer in order to obtain a private loan. Also, while interest
rates, fees and other loan program terms are competitive, they vary widely from
lender to lender. It is important to compare your options before choosing a
private loan. Once you have found a loan that meets your needs, you can usually
apply online and in many cases get an instant decision on approval.
The bottom-line with student loans is that you do have options when you
cannot pay all of your college costs out-of-pocket.
cannot pay all of your college costs out-of-pocket.
