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 We've all read or heard about the runaway costs of higher education. Both public and private colleges and universities are now charging students $15,000 - $40,000 annually to attend school. Numbers this big means finding a student loan to help finance college costs is important.
On Campus Student Loans
The good new is that according to the Department of Education, a college or university is likely to provide nearly as much funding as the federal government. You'll need to contact your school's financial aid office to find out what aid is available and if you are a graduate student, you might also want to check with the department chairman.
Federal Student Aid
In this article, we're going to concentrate on the federal student loans available to the public. We've mentioned in an earlier article on Federal Financial Aid that the types of aid available falls into three categories - grants, work study and student loans. Let's take a closer look at these financing options.
Student Grants
Grants are financial aid that does not have to be repaid. The government has two student aid grant programs:
- Federal Pell Grant - This grant is available almost exclusively to undergraduates. Pell Grants are based on need, cost of attendance and whether you are a full or part time student. In 2007 / 2008, the Pell Grant limit is around $4,310.
- Federal Supplemental Educational Opportunity Grant - FSEOG Grants are targeted to undergraduates that demonstrate exceptional financial needs. Priority for FSEOG Grants is given to students that are already recipients of Federal Pell Grants.
Work Study Programs
With work study programs you are working to earn money while enrolled in school. The money you earn pays for your educational expenses.
- Federal Work Study - This program is for both undergraduate and graduate students and consists of jobs on campus or off campus. If you are in a Federal Work Study program, you are paid at least minimum wage. There is no limit on the amount of money you can earn in this program.
Federal Student Loans
Federal student loans are borrowed money and need to be repaid with interest. Some programs allow the parents and / or the student to borrow money. The student loans offered from the federal government include:
- Federal Perkins Loan - These student loans are offered by participating schools to students demonstrating the greatest financial need. Once again, priority for Perkins Loans is given to students already receiving Federal Pell Grants. Repayment is made to the school and loan maximums are $4,000 for undergraduates and $6,000 for graduate students.
- Subsidized FFEL or Direct Stafford Loan - This student loan is part of the William D. Ford Federal Direct Loan Program (Direct Loan) and is subsidized by the Department of Education, meaning that they pay the interest on the loan until the student graduates. Both parents are students are eligible for these loans that range from $2,625 to $8,500 depending on the grade level of the student.
- Unsubsidized FFED or Direct Stafford Loan - This loan works the same was as the Subsidized Loan except that the borrower (student or parent) is responsible for the interest during the entire life of the loan. Stafford loans can range from $2,625 - $18,500.
- Federal PLUS Loan - These college loans are available to parents of dependent undergraduate students. PLU S loans maximums are calculated as the cost of attendance minus all financial aid received by the student.
Applying for a Federal Student Loan
Remember, there is a three step process for applying for a student loan:
- Complete the FAFSA (Free Application for Federal Student Aid)
- Review your SAR (Student Aid Report)
- Contact the schools that you are considering attending
Keep in mind that financial aid administrators are a useful and helpful source of information on grants, work study and student loans. The college or university you're planning on attending will eventually package up their offer of aid and present that information back to the student in the form of an Award Letter.
Private Student Loans
Once you've exhausted your federal student loan or student aid options, the next logical step would be to seek a private student loan. Private student loans are becoming increasingly popular due to the fact that federal grants and loans have not been keeping pace with the rising costs of tuition and living expenses.
There is a fairly robust market when it comes to financial institutions that at willing to lend students money. Citibank, Bank One, Wells Fargo, Wachovia, and Bank of America are some of the larger banking lenders that specialize in this area. In fact, all of these private lenders are run accredited programs aim at meeting the financial needs of students.
Managing Student Loans
As time moves on, all students carrying loans eventually have to start repaying these loans. If a student has completed four years of undergraduate work and / or attended graduate school, the number and complexity of their student loan structure can be confusing.
At this point, most students look for help in managing their student loan payments. After all, students are interested in paying off their loans as quickly and efficiently as possible. They're also trying to make sure they're meeting all of their loan obligations on time so that they can start building on and raising their credit scores.
Sallie Mae has been helping students find and manage their student loans for over 30 years. If you like the idea of managing all of your student loans online and in one place, then you really should take a closer look at Sallie Mae's offerings.
Consolidating Student Loans
Perhaps the ultimate in student loan management services is the ability to consolidate all of your existing student loans into one loan that requires only one monthly payment. That's where consolidating a student loan offers former students some help.
Student Loan Consolidation Center
Eligibility rules, student loan types and interest rate calculations can be difficult for many of us to understand. Fortunately, the student loan consolidation center can walk you through both the decision making process and consolidation loan applications.
You can find a good deal more information on student loan consolidation by visiting the student loan center. Run by the Department of Education, you will find more information concerning repayment periods, terms and conditions, consolidation tips, checklist tools and even online forms for applying for a consolidation loan.
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