Significant Loan

Money to pay for the high cost of college is a concern for every student. The rising cost of college means that many students can’t cover the full cost with grants, scholarships and savings. Sometimes, student loans are the only way to make a college education a reality.

The federal government offers a number of student loan options to help students from a number of different situations qualify for financial aid. All student loan programs at the federal level use the FAFSA (Free Application for Federal Student Aid) as a main application, which can be completed online or at your school. The FAFSA is free of charge and will help determine what financial aid you will best qualify for based on the unique set of circumstances that make up your particular situation.

A Federal Perkins Loan, also known simply as a Perkins Loan, is a need-based student loan offered by the U.S. Department of Education. As of the 2009 academic year, undergraduates are limited to a loan of $5,500 per year with a lifetime maximum loan of $27,500. For graduate students, the loan maximum is increased to $8,000 per year with a lifetime limit of $60,000 (although that number does include undergraduate loans). Perkins loans carry a fixed interest rate of 5% for a ten-year repayment period. Borrowers have a nine month grace period – they begin repayment in the tenth month upon graduating, when falling below half-time status or with their withdrawal from their school. The 5% interest does not begin to accrue until the borrower begins to repay the loan.

Stafford Loans are another well-known student loan offered to assist with financial aid and are actually divided into two programs. One is called the Federal Family Education Loan program (FFEL); the other is called the William D. Ford Direct Loan program. Both programs have definite differences, as well as similarities, but the important basic fact is that both programs provide financial aid to students who are looking for ways to pay for college.

The U.S. Federal Government is the single largest source of financial assistance for college students. In 2006 they provided more than $50 billion to more than $10 million students.

Federal Loans

Stafford Loans

There are 2 types of Stafford loans The 2 types are Federal Family Education Loan (FFEL) and Direct Loans Financial need is not required to qualify. Students must be enrolled at least half-time to be eligible.

Direct Loan

The William D. Ford Federal Direct Student Loan Program is the formal name for Direct Loans or Direct Stafford Loans Eligible students borrow the funds directly from the U.S. Department of Education. There are 3 types of Direct Loans administered by the Department of Education. The 3 types are Direct Stafford Loans Direct PLUS

Loans, and Direct Consolidation Loans The federal government will pay part of the interest for students who demonstrate financial need.

FFEL

Federal Family Education Loans (FFEL) are made by banks and private lending institutions. The 3 types of FFEL Loans are FFEL Stafford Loans FFEL PLUS Loans and FFEL Consolidation Loans.

PLUS Loan

PLUS Loans are Parent Loans to for Undergraduate Students. Funds are borrowed by the parents of the student. The loans can be used to pay for all or a part of a student’s undergraduate expenses

Federal Perkins Loan

Federal Perkins Loans are based on financial need. The educational institution loans the money to the student. Students do not have to be enrolled at least half-time as with Stafford Loans The interest rate is fixed at 5%.

Federal Grants For Students

Grants differ from loans in that they do not have to be repaid by the recipient.

Federal Pell Grant

Federal Pell Grants are the most common source of federal financial aid used by U.S. students.

TEACH Grant Program

The TEACH Grant Program provides up to $4,000 per year in grants to students. The stipulation for receiving the grant is that the student must agree to teach at an elementary or secondary school that serves students from low-income families.