What You Should Know About Student Loans
by Mike Selvon
If college were not so expensive, then many people would not need student loans to help them pay for expenditures. A student loan can help you pay for the things you must have, which scholarships and Federal grants do not cover. refinancing student loans
Parents who have saved for your college education often have not saved enough to help cover every expense. Tuition, books, room and board quickly eat through savings and there is often nothing left over for the necessities, such as food and gas.
A college loan can be the way to help pay for college but there are several types of student loans available. The three main types are: Federally guaranteed loans, parent loans and private loans from a credit card company or bank. refinancing student loans
Each has certain rules and repayment schedules, so it is important to thoroughly research the differences. You certainly do not want to have to worry about repaying the loan while you are attending school, if you can possibly avoid it. refinancing student loans
If you are a student and need to take out an education loan, then you will want to make sure that your loan does not require repayment, as long as you are enrolled in school. Loans such as the Stafford Loan are guaranteed through the Federal government and have a set interest rate. The loan note becomes due within six months of graduation or leaving school full-time.
In order to file for these loans, you must fill out a Federal Application for Student Assistance. If you are independent from your parents and do not rely on them for support, make sure and notify the university or college before filling out the paperwork. refinancing student loans
Once the paperwork is filled out and submitted it can take several weeks for the information to be processed. An education loan takes time to administer, so it is important to get your paperwork finished and submitted months before classes begin. The consequences of waiting too long to fill out the paperwork and submit it, could mean not having the funds available to pay for your tuition and books when the semester starts. refinancing student loans
Most students worry about money while they are in school. In a perfect world, every student would be able to attend school and never have to worry about where the money is coming from that pays for their education. Unfortunately, this is not a perfect world and most students must take out student loans to cover their expenses. If you can get by without using a student loan that is great, but if you cannot, then you must know all of the facts before signing on the dotted line. refinancing student loans
Showing posts with label Stafford loan. Show all posts
Showing posts with label Stafford loan. Show all posts
Saturday, March 7, 2009
Wednesday, March 4, 2009
Understanding The Basics Of Stafford Student Loans
Understanding The Basics Of Stafford Student Loans
by Donald Saunders
Back in 1965 Congress instituted the Federal Family Education Loan Program in order to provide financial aid to students. One element of this loans program is Stafford loans which were originally intended only to assist those students in very real financial need but which today represent over 90% of all Federal education loans. refinancing student loans
Since their inception Stafford loans have evolved to take account of changing conditions and nowadays there are two main types of the loan - subsidized and unsubsidized Stafford loans.
For subsidized loans the Federal Government accepts responsibility for paying any interest accruing on a loan from the date of issue until the student is required to start making repayments. Usually a student will not have to make repayments while he remains enrolled in a program of study which is considered to be a 'half-time' or greater course of study and for a grace period of six months after the conclusion of his course. However, a student may begin to make payments earlier if he so chooses. refinancing student loans
Since the interest on the loan is being subsidized, these loans are normally only granted on the basis of need and officials will look at both a student's and the family's income when deciding whether a student qualifies for a subsidized Stafford loan. Students are required to fill out a Free Application for Federal Student Aid application form which includes details of income and the student will then be assigned a number called the Expected Family Contribution calculated from the declared income. refinancing student loans
About two-thirds of all subsidized Stafford loans are provided to students whose parents have an Adjusted Gross Income of less than $50,000 per year. A further one-quarter are awarded to those in the $50-100,000 per year bracket. Thereafter the definition of 'need' becomes a little fuzzy and slightly under one-tenth of subsidized loans are allocated to students with a combined family income of over $100,000. refinancing student loans
For those students who do not meet the requirements for a subsidized loan most will qualify for an unsubsidized Stafford loan. The main difference here is that students will be required to meet all loan interest payments, although once again payment will not generally start until six months after the completion of the student's course.
The mechanics of an unsubsidized Stafford loan means that a loan can be reasonably costly because the interest accumulates during the period of study and so the capital sum on which repayment will eventually need to be made will also grow. Let's look at a very simplified example. refinancing student loans
Let's say that a student borrows $5,000 at the start of his first year of study at an interest rate of 6.8%. After one year the interest due is $340 which will be added to the loan capital. During the next year the student will accrue interest on the new capital sum of $5,340 at 6.8% which will come to some $363 raising the total debt at the end of the second year to $5,703. Of course this is not wholly accurate because interest is in fact calculated and added on a monthly basis but it does nonetheless illustrate the principles underlying this form of loan. refinancing student loans
Depending on the sum of money which is borrowed every year and the time before repayment starts it can be seen that students can pay a relatively high price for the benefit of delaying the repayment of a Stafford loan. refinancing student loans
In spite of the apparently high cost it needs to be borne in mind that many of the alternative methods for funding a college education are considerably more costly and that many students would simply not be able to afford to attend college without a Stafford loan.
by Donald Saunders
Back in 1965 Congress instituted the Federal Family Education Loan Program in order to provide financial aid to students. One element of this loans program is Stafford loans which were originally intended only to assist those students in very real financial need but which today represent over 90% of all Federal education loans. refinancing student loans
Since their inception Stafford loans have evolved to take account of changing conditions and nowadays there are two main types of the loan - subsidized and unsubsidized Stafford loans.
For subsidized loans the Federal Government accepts responsibility for paying any interest accruing on a loan from the date of issue until the student is required to start making repayments. Usually a student will not have to make repayments while he remains enrolled in a program of study which is considered to be a 'half-time' or greater course of study and for a grace period of six months after the conclusion of his course. However, a student may begin to make payments earlier if he so chooses. refinancing student loans
Since the interest on the loan is being subsidized, these loans are normally only granted on the basis of need and officials will look at both a student's and the family's income when deciding whether a student qualifies for a subsidized Stafford loan. Students are required to fill out a Free Application for Federal Student Aid application form which includes details of income and the student will then be assigned a number called the Expected Family Contribution calculated from the declared income. refinancing student loans
About two-thirds of all subsidized Stafford loans are provided to students whose parents have an Adjusted Gross Income of less than $50,000 per year. A further one-quarter are awarded to those in the $50-100,000 per year bracket. Thereafter the definition of 'need' becomes a little fuzzy and slightly under one-tenth of subsidized loans are allocated to students with a combined family income of over $100,000. refinancing student loans
For those students who do not meet the requirements for a subsidized loan most will qualify for an unsubsidized Stafford loan. The main difference here is that students will be required to meet all loan interest payments, although once again payment will not generally start until six months after the completion of the student's course.
The mechanics of an unsubsidized Stafford loan means that a loan can be reasonably costly because the interest accumulates during the period of study and so the capital sum on which repayment will eventually need to be made will also grow. Let's look at a very simplified example. refinancing student loans
Let's say that a student borrows $5,000 at the start of his first year of study at an interest rate of 6.8%. After one year the interest due is $340 which will be added to the loan capital. During the next year the student will accrue interest on the new capital sum of $5,340 at 6.8% which will come to some $363 raising the total debt at the end of the second year to $5,703. Of course this is not wholly accurate because interest is in fact calculated and added on a monthly basis but it does nonetheless illustrate the principles underlying this form of loan. refinancing student loans
Depending on the sum of money which is borrowed every year and the time before repayment starts it can be seen that students can pay a relatively high price for the benefit of delaying the repayment of a Stafford loan. refinancing student loans
In spite of the apparently high cost it needs to be borne in mind that many of the alternative methods for funding a college education are considerably more costly and that many students would simply not be able to afford to attend college without a Stafford loan.
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