Many Forms Of Financial Aid Are Available
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 federal student loan programs 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.
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 FFEL program allows private lenders to offer federally guaranteed loans to students and their parents. Private lenders use their own capital to finance loans and receive subsidies from the government in exchange. Because of the involvement of the government, the FFEL loans can be offered at a much lower interest rate.
The other branch of the Stafford loan program is called the William D. Ford Federal Direct Loan Program (abbreviated FLDP, FDSLP and Direct Loan Program.) The lender in FLDP loans is the U.S. Department of Education. This is the major difference between the FLDP and the FFEL programs. Students qualify for these loans based specifically on financial need.
Stafford loans as a whole are further broken down into two different groups: subsidized and unsubsidized loans. Subsidized loans are, as usual, offered to students based on demonstrated financial need. When you have a subsidized loan, the interest is paid by the federal government while you're still in school, during the grace period and even during authorized deferment. Unsubsidized student loans mean that the borrower is responsible for all the accrued interest while enrolled in school.
Student loans are available in a variety of forms as long as students are informed. The more information they take advantage of, the more they will find scholarships and grants for a college degree they are eligible for and the less they will need loans. Tuition for online school, as well as a traditional education, doesn't need to be an insurmountable burden to the college student when they are well-informed and ready to do the research needed.
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