College Student Loans | Stafford Loan, PLUS Loan and Private Loans

The Federal Stafford Loan and Private College Student Loans

Stafford Loans defined

The Federal Stafford loans is a federal student loan that can be availed by college students to augment existing grants, scholarships, grants, personal funds or family funds used to shoulder an applicant’s post secondary education. Almost all students are qualified to receive Stafford loans in spite of credit reports. Depending on the student’s need, such loans may either be subsidized or unsubsidized.

The Different types Federal Stafford Loan Defined- See: studentaid.ed.gov for Federal Direct Loans. Federal Stafford loans fall under different categories, namely: undergraduate Stafford loans, subsidized and unsubsidized Stafford loans.

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Bck to Federal Stafford Loans: Undergraduate Stafford loans cater to undergraduate students who are enrolled in educational institutions that actively participate in the Federal Family Education Loan Program. These loans have a fixed rate and can be used to shoulder tuition fees, miscellaneous fees, a student’s room and board and other school expenses. These loans are not based on credit but can either be unsubsidized or subsidized. This is determined by a student’s need for financial assistance.

Unsubsidized Stafford Loans are student loans that are guaranteed by the federal government but are not determined based on a student’s need for financial assistance. Interest for such loans will be computed based on the time that the loan is distributed through the school. Payment of the loan can be postponed until six months from the date of graduation.

Subsidized Stafford Loans are student loans that are guaranteed by the federal government and based on a student’s need for financial assistance. Interest does not accumulate while the student is in school. As this type connotes, the federal government shoulders the payment for the interest while the student is in school and during postponement periods.

In a nutshell, among the notable features of the undergraduate Federal Stafford loan are low interest rates at fixed rates. The rates can go as low as 5.60%. Qualified students can borrow up to $2000 or more. Qualified students need not pay anything while they are enrolled in school.

Eligibility for Federal Stafford Loans

In order to qualify for a Federal Stafford loan an applicant must be or have the following:

• Applicant must either be a citizen of the United States, permanent resident of the United States, or an eligible non-citizen

• Applicant must be enrolled in a school that actively participates in the Federal Family Education Loan Program

• Applicant must be eligible for a Stafford Loan and should have submitted a FAFSA application

• Subsidized Stafford loans applicants should have an established need for financial assistance. This will be verified by the applicant’s school.

• Applicants should have a plan to attend school for at least half of the time

For Stafford loans, it is important to determine if a student can be considered as dependent or independent. There are a set of questions that one will be required to answer to determine this. An applicant who can answer YES to any of those questions is considered independent. This will help a student learn how he or she can take advantage of the financial aid to the fullest.

The amount that applicants can borrow is based on one’s grade level and on the student’s status. Students who are considered independent have an advantage because they can be given more if they have established that they are paying for their education without help from anyone else.

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The Federal Plus Loan

Federal Plus Loan – Graduate's Aid Defined

The Graduate’s Aid loan is a student loan that has fixed low interest rates. Such loan is guaranteed by the federal government of the United States. Not like the usual loans, the Federal Plus Loan – Graduate's Aid loan does not require the applicant to exhibit imminent financial need. This is comparable to a private student loan. Some of the benefits from this loan include guarantee from the federal government and a fixed interest rate.

The Graduate’s Aid loan permits graduate students to have access to an amount equivalent to the total cost of their graduate school expenses. This includes tuition fees, board and lodging, school supplies, laboratory expenses, travel expense and other expenses minus all other financial aid. Major benefits of this loan include:

• Fixed rate of interest pegged at 8.5%

• Successful applicants of the loan need not pay anything while they are in school

• Applicants do not need cosigners to avail of the loan

• The total amount of interest is deductible from tax payments for graduate students.

Eligibility to this loan is not based on the applicant’s family’s financial capacity, personal income or need for financial assistance. Aspiring borrowers will need to pass a credit check.

Maximum amount for granted by the Graduate's Aid loan

There is an annual limit imposed on the amount that graduate students can borrow from the Graduate’s Aid loan. The amount is usually equivalent to the applicant’s cost of attendance excluding other amounts received from financial aid. To illustrate, if an applicant’s cost of attendance is $80,000 and he receives $55,000 from other sources of financial aid, the graduate student can borrow up to $ 25,000 only.

Who gets the money?

For Graduate’s Aid loans, the standard operating procedure is to send the funds directly to the school of choice. Usually, the school will expect the graduate student to sign a check to expend the funds and forward the payment to the school. The usual schedule of payments is in several installments, the least of which is two. The installment amounts are usually less than or equal to half the loan amount. Money from the loan will be used to pay for all expenses incurred while the graduate student is in school. This includes tuition fees, miscellaneous school expenses, board and lodging. Should there be any money left after the expenses are settled, the graduate student will receive the amount in cash or check unless the student allows that the money will be released to the school account. As a rule, amounts in excess of the loan money should be used to shoulder education expenses.

Graduate students who are qualified to avail of this loan must not have records of delinquent payments on any debt. In order to avail of this loan, students need to have a clean credit report. This means that there should not be any record of payment defaults, foreclosures, repossessions, garnishments and other blemishes within the 5 years that the credit report is generated.

Source: for additional details on Federal loan types, please see the Department of Education's website located at http://www.studentloans.gov