When a student or parent sets out to obtain a loan and/or financing a college education there are a many different sources they can go to in order to acquire the funding necessary. However, there are two different categories of loans which are either federal loans or private loans.
As for federal funding for college, in many cases it is much easier to get the financing if you fit the criteria set in place. By far, one of the most popular federal student loans is the Stafford loan. There are two types of Stafford loans which are the federal family educational loan and the William D. Ford federal direct loan. The process of obtaining a Stafford loan is through the student filling out a federal student aid application, then once approved they will sign a promissory note on the loan.
The only real difference between the two types of Stafford loans is where the actual funding is coming from. For a direct loan, the funds are coming directly from the federal government as for a FFEL loan, the funding comes from either a bank, credit union or another participating lender in the program.
There are also a couple more that should be mentioned in this article and those are the Parent PLUS and Perkins loans. First, the Parent PLUS loan is designed for parents in need of assistance for paying their child’s college fees. This loan basically will fill in any gaps that the parent needs in order to cover all the college expenses fully.
The Perkins loan is basically a student loan which can be applied for at the college or university financial aid office which usually has a very low interest rat, but has a maximum loan amount of around $4,000 each year for students. They are federal fund and can be added to other types of funding. There are late fees and fees for skipping payments on the Perkins loan as well.
These loans and more can all be inquired upon at your selected college or university.
Credit history may not be as necessary if it is necessary at all in obtaining these types of funding options. As opposed to federal student loan funding, there are many private lenders willing to provide assistance for college funding as well. However, if you so decide to take the private lender route for financing a student loan, it is important to remember that most will need a bit of a credit history from the potential debtor and will most likely require a co-signer on the loan if the student with not much credit history at all is attempting to obtain the financing.
Federal funding for college students who need the financing, as well as parents is very available for anyone who has a need for such funding and it would be a good idea to look at all the options available in order to compare interest rates, fees, and more as these student loans will be around for a while after college as some loans will begin the payment schedule immediately during college like the Parent PLUS. Other repayment schedules will begin after 6 months for Stafford loans and 9 months for Perkins. So it would be a good idea to get all this information first hand before making any quick decisions about your college student loans.
By: S. Michael Windsor
With the costs of schooling so high, many students run into trouble paying their bills and end up with bad credit. Now you may be scared into thinking you cannot complete your education! However, there is still hope for cleaning up these financial messes. You can get student loans with bad credit from the government. The interest rates are low compared to other types of loans. If you go through a lender, your interest could be higher. There are different types of student loans with bad credit. There is the Stafford Loan, which has a deferred payment plan. It also depends whether you choose a subsidized or non-subsidized loan. A subsidized loan is when the government pays the interest. Then there are PLUS Loans, which are parent loans for undergraduate students. Your parents can get a PLUS loan from the Federal Family Education Loan Program or the William D. Ford Federal Direct Loan Program. In order to qualify, you must be a dependent undergrad enrolled at least half time in college, and your parents must have good credit. If you have bad credit or no credit, your parents can help by getting a PLUS loan to help pay your education expenses.
Lets face it, getting a loan with bad credit is hard. You should try for one yourself first, and then if you don’t get approved, find a co-signer. These issues with credit created student loans for people with bad credit. There are different types of loans in this category, one being the signature loan. Signature loans are activated after the receipt of a signed activation letter. Such a loan does not require a co-signer or collateral like other loans. The amount given is based on the ability for re-payment. The term is 5 years and it can be combined a Federal loan for extra money. It can aid in repairing a borrower’s credit score in time. There are different places to look for student loans with bad credit, but conversing with your chosen school would be the first step.
If you are an undergraduate or new student, two of the best student loans with bad credit are the Federal Perkins and the Stafford Loan. Both offer low interest for students. Of course, being a mature student, you know that research is the key to finding the best loan for you. You should choose one that will allow you to finish school regardless of your credit history.
By: Marlon Jackson
Direct student loans are federal government loans provided through the William D. Ford Federal Direct Loan Program. These types of loans are designed to help students who have graduated from the high school and are continuing their education in colleges, universities or trade schools.
Direct student loans are part of the federal student aid programs administered by the US Department of Education. These loans are not offered through private lenders or companies. The loan agreement is between the student and the US Department of Education, without any agencies as a middle man.
Students that want to apply for direct student loans must complete a Free Application for Federal Student Aid (or FAFSA) over the internet and submit all required information and documentation. In addition each student will also have to complete a Master Promissory Note (or MPN). MPN is a legal document that explains the contract between the student and the Department of Education. It also outlines how the loan will be repaid and the specific terms and conditions of the loans.
After awarded with one of the direct student loans, you should sign up and use the Service Center. It provides you all the information of your payments and allows you to view the records on the balance you owe. If you need one, you can also obtain a counselor service from a Direct Loan Servicing site.
To be eligible for direct student loans, a student needs to attend the school that is participating in the direct loan program. Also, the student must be enrolling for at least on a part-time basis.
Types of Direct Student Loans
The two most common direct student loans are: (i) subsidized Stafford loan and (ii) unsubsidized Stafford loan. The subsidized loan has an interest subsidy and paid by the Government. Students who are awarded don’t need to worry about paying interest and hence can concentrate on his or her study in full.
Not all students will receive subsidized direct loans (Stafford loan). Only those students with very few resources and with greater financial needs are qualified for subsidized loans. Students who are dependent, or have parents that are able to help pay for their schooling are usually given the unsubsidized direct loan which doesn’t have an interest subsidy.
For graduate students who are considered independent or have families of their own to support, or no living parents to assist with educational funding can apply for PLUS loans. PLUS loans are low interest loans for graduate students and parents. These loans are under the same criteria as the Stafford loans, you’re required to complete and submit FAFSA and a MPN. Typically direct student loans have a limit on the total amount. Most students manage to get by with loans of $8,000.
Direct student loans have a fixed interest rate that is set every July 1st. There is also a loan fee that can be up to 4%. This fee is usually used to offset the cost of the programs or services.
By: Yvonne Suzannah