What You Need to Know About Federal Student School Loans

admin — Mon, 21 Jun 2010 10:42:59 +0000

School loans are considered “financial aid” but differ greatly from scholarships and grants because loans need to be paid back. There are three major types of loans, Federal Student Loans, Federal Loans for parents, and Private Loans. This article focuses on the most common type of school loan, the Federal Student Loans.

As the name implies these loans are given directly to the student by the government. Within this main category there are two types of loans; subsidized, which means that the interest is paid by the government while the student is in school, and unsubsidized, which means that the student must pay the interest. However, with unsubsidized loans there is the option to have the interest payments put on hold and added to the total loan until the student is done with school and in a better position to make payments. Subsidized loans are reserved for students who demonstrate a financial need: usually low family income.

Loan amounts are decided based on the students needs, and the students access to family resources, scholarships, grants and other forms of financial aid. Nearly all full-time students are eligible for at least some amount of loan. Both the subsidized and unsubsidized loans offer a six-month grace period to allow the student to find a job in their field and become more financially stable before payments are due. If a borrower becomes a part-time student there is a three-month grace period before payments are due. With Federal Student Loans there is a limited amount that a student can borrow each year.

There are two ways that a student may receive Federal Student Loans; Federal Direct Students Loans (FDLP) or Federal Family Education Loans. FDLP loans start with funds from the U.S. Treasury, these funds are then sent through the U.S. Department of Education and then distributed to the college or university. The school then uses it to pay school expenses and the remainder is available for the student to withdraw. Federal Family Education Loans (FFEL or FFELP) are funded by private banking organizations. The advantage of FFELP loans is that students have payment options available to them that are similar to the options available when taking out a home loan or consumer loan.

Students can apply for Federal student loans online. Most universities and colleges provide computers in their financial aid office where students can apply with the help of people who use the system constantly. Applying online is done through a program called Free Application for Federal Student Aid or FAFSA. By applying online you will automatically be considered for any type of aid including grants, which do not have to be paid back. Applying online can help you find out how much help you will be receiving as much as seven days faster, which will make it easier to secure other funds if necessary.

If a student has turned in a FAFSA application in the past, they can use something called a renewal FAFSA that automatically inserts information that does not change such as name and the school you are attending. This makes the process even faster. Students are also able to sign their application by using a pin number given to them by FAFSA, so there is absolutely no paperwork to be sent through the mail.

By: Chris Simons

Student Loan Consolidation Info – What is the (FFELP) Federal Family Education Loan Program?

admin — Tue, 12 Jan 2010 08:33:21 +0000

The FFELP or Federal Family Education Loan Plan is the best federal loan to look for while researching for student loan consolidation information. FFELP is a Federal government backed lending scheme and is an umbrella program that includes other popular lending programs like Stafford Loans, PLUS loans and Perkins Loans. Setup by the congress in 1965, it began its work in 1966 and since then has provided student loans of over half a trillion dollars to students and parents looking for finical help to pay their college or university education.

Money for the Stafford Loan, PLUS Loans and other FFELP loans are derived from a network of large national credit unions, banks and other financial institutions who participate in the program. Lenders feel secure while lending to the government plan and borrowers get maximum available benefits and offers with a low interest rate while applying for the Federal loan program. These loan programs are created to provide maximum benefit to both parties and reduce the amount of risk and other factors while dealing with private lenders.

The most popular loan program under the FFELP is the Stafford Loans which is provided in two different forms, subsidized and unsubsidized. In the earlier form government pays all the interest on the loan acquired while the student is in the college and for a further six month grace period while with the unsubsidized loan the borrower is responsible for repaying the total interest acquired on the loan.

Another major plan under the FFELP is the PLUS (Parent Loans for Undergraduate Students) loan plan. These loans are offered to parents who have a requirement to pay for their children’s college and other fees. However since July 1, 2006, professional and graduate students can now apply for a PLUS loan as they can help their parents to repay the amount which they will be repaying eventually.

All of these loan plans have strict rules of instruction and guidelines that has to be filed by the student or the parents while applying for the loan. The core information supplied with the application helps the loan officer determine the eligibility and requirement for the loan. Normally the decision is taken by the financial aid department of the individual college and they suggest the package after analyzing the students need for the loan and considering their repayment ability.

Once the loan is approved it is normally disbursed directly to the student and parents twice per year in each semester and any other remaining part of the loan is sent to the student after deducting any fees inured in the process. The fees may range up to the 4% of total amount of loan. Some companies charge a 3% origination fee and 1% insurance fee before they assign the loan to the student.

It is very important to keep the information in mind while applying for the loan as any misguided information can lead you into a deep crisis once you are out of the college and have a heavy interest total on your loan.

By: Ian Wilkie

Student loan consolidation » Federal Family Education

What You Need to Know About Federal Student School Loans

Student Loan Consolidation Info – What is the (FFELP) Federal Family Education Loan Program?