Student Loan

We've all read, or heard, about the runaway costs of a higher education. Both public and private colleges and universities are now charging students $15,000 to $50,000 annually to attend school. Costs of this magnitude mean that finding a student loan to help finance college costs is essential to most families and students.

On Campus Student Loans

The good news 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 help is available.  If you are a graduate student, you might also want to check with the department chairperson.

Federal Student Aid

In this publication, we're going to concentrate on the federal student loans available to the public.  We've mentioned in our Federal Financial Aid article the types of aid available fall into three categories:  grants, work study, and student loans.  Let's take a closer look at each of 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 2011 / 2012, the Pell Grant limit is $5,550.
• Federal Supplemental Educational Opportunity Grant - FSEOG Grants are targeted to undergraduates that demonstrate exceptional financial need.  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, then 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.  These loans 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 $5,500 for undergraduates and $8,000 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.  This means the government pays the interest on the loan until the student graduates.  Both parents and students are eligible for these loans, which range from $5,500 to $12,500 depending on the grade level of the student.
• Unsubsidized FFEL or Direct Stafford Loan - This loan works the same way as the Subsidized Loan, except the borrower (student or parent) is responsible for the interest during the entire life of the loan.  Stafford loans can range from $5,500 to $20,500 for graduate students.
• Federal PLUS Loan - These college loans are available to parents of dependent undergraduate students.  PLUS loan 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:

1. Complete the FAFSA (Free Application for Federal Student Aid)
2. Review your SAR (Student Aid Report)
3. Contact the schools that you are considering attending

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 to attend will eventually package their offer of aid, and present that information back to students 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.  This is due to the fact the size of federal grants and loans have not been keeping pace with the rising costs of tuition and college living expenses.

There is a fairly robust market when it comes to financial institutions that are willing to lend students money.  Citibank, Bank One, Wells Fargo, and Bank of America are some of the larger banking lenders that specialize in this area.  In fact, all of these private lenders run accredited programs aimed at meeting the financial needs of students.

Managing Student Loans

Eventually, students need to start repaying their 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, many students will 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 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, requiring 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 can find information concerning repayment periods, loan terms and conditions, consolidation tips, checklist tools, and even online forms that can be used to apply for a consolidation loan.

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