College Student Loans : Federal and Private Loans
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College Student Loans : Federal and Private Loans
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.
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Help answer the question about college student loans
What's the best student loans for college? Does anyone have personal experience with one?I'm a college student and financial aid, just ain't cutting it, does anyone have anything to recommend for me, loans wise?
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S. Michael Windsor is currently publisher and a writer for BackToSchoolNetwork.com. The BSN Online Back To School Guide is a premier college back-to-school information platform that provides individuals with a quality in-depth look at college living and the associated products, services and information available today. Visit us today at http://www.BackToSchoolNetwork.com and subscribe to our Free Member services.
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universities.atwebpages.com – try this site. It has info about different US student loans and scholarships.
I would say that your idea is a good one. You should talk this over with someone at the financial aid office at your school. They could crunch the numbers, find any loopholes, etc. Good luck!
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Federal student loans have the best interst rate. Stafford loans are 6.8% and Perkins loans are 5% Perkins and subsidized stafford loans are great in that the govermnet pays the interest for you while you are in school. Plus you don't need a cosigner for any federal loans and there are mandatory forgiveness policies (such as if you become disabled or die, the school closes before you can complete your degree program or if you become a teacher in a low income area, work in a public service job like Headstart, Police officer and many others.) Your loans will be spread out over a 10 year period, and even if you have multiple loans like I did (about 7 overall) I only made one payment to the company that bought my loans after I graduated. (Sallie Mae) I never had a need to consolidate because they distributed my payments along all my loans automatically.
Besides having interest rates that are DOUBLE what you would pay with the federal government you have NO chance the goverment will pay the interest while you are in school with a private loan. You will also likely be required to have a cosigner because without a full time job and good credit, you have about zero chance of being approved. Also the interest will be a variable rate interest.. meaning the payments WILL go up. Prob quite a bit, over the course of the loan, with NO extra money going to the principle.
Another bad thing about Private loans is the are entirely unregulated, meaning each company will have different terms and different regulations. Prepayment penalites, mandatory repayment no matter what.. even if you die or become disabled your cosigner will be responsible for paying it back.
There are also very few regulations on the amount you can borrow to go to college. Folks rack up 160K worth of student loan debt just so they can affort to have their own appartment and are now qualified to be a kindergarden teacher. They will never be able to afford to repay it. It's absolutely insane. Never borrow more for your entire college career more than what you would expect to earn your first year out of college. Period.
The main complaint about federal loans is they can't borrow enough, but loans were never set up to the the only source of finanical aid for school, but a lot of folks resort to private so they can have the appartment or the laptop and never think they will graduate with more debt than they will be able to afford to repay. That private dorm room now may make them have to move into the folks basement after finally landing that "dream" job.
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Complete and total nonsense. My first thought was "Maybe Five Towns isn't a participant in the federal student aid (Title IV) program", but that's not true – Five Towns is a full participant, and their Federal School Code is 012561.
My next thought was to check this claim on the Five Towns school website, but the information on the financial aid page could not possibly disagree more with what you were told. The financial aid page says:
"FTC students are eligible to participate in all Title IV Student Financial Assistance programs, including Pell, FSEOG, FCWS, and the Direct Student Loan Program."
That "Direct Student Loan Program" that they are referring to is the Department of Education program that makes Stafford and PLUS loans.
However, what IS interesting (and what the officer might have been referring to) is that the school participates in the much smaller Direct Student Loan Program, and not the Federal Family Education Loan Program, which far more schools participate in.
The Direct Student Loan Program operates by making the Staffords and PLUS loans directly available to students through the Department of Education, while the Federal Family Education Loan Program is the one that allows private banking institutions to make those same Stafford and PLUS loans available to students under the auspices of the federal student aid system. In reality, it doesn't really make any difference to the student.
I'd suggest a call to another aid officer, asking him to explain how the school's choice of participating in the Direct loan program, rather than the Federal Family program impacts the availability of Stafford (government-backed) loans.
I hope that helped. Five Towns definitely accepts the Stafford loans, but they offer them in a somewhat less common way than most of the other schools.
Good luck!
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No, you can't file on private student loans either. Sorry.
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Gary (Northern California)
You are the one who signed for the loans you got
You are the one who decided how to spend that borrowed money.
So you are the one who has to pay it back,
SO DO IT…find a way to put your efforts into honoring your committment to pay these debts.
You shoudn't compare to others, these are your debts, The faster you pay them off, the better your credit rating will be…
screw around with them, and you will have lousy credit rating and owe the same amount plus interest.
Unfortunately you are unable to consolidate your Federal Student Loans with your Private Student Loans through the FFELP Consolidation Program.
I would also advise against consolidating your Federal Student Loans with your Private Student Loans because you lose all your Federal Benefits on your Federal Student Loans if you do consolidate the two types of loans together.
It does seem that you are very interested in Private Loan Consolidation however. Hope this helps you out! For more information on Federal vs. Private Student Loan Consolidation please visit the source below.
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