Student Loan Overview
With college tuition on the rise year after year, student loans play an integral part into funding college for students. Student Loans and Financial Aid can be confusing to some so here are the few types of student loans.
Federal Student Loans
The student must be enrolled full time to be granted this type of loan. Payments are made directly to the student and are guaranteed by the U.S. Department of Education. These loans are used to supplement personal and family resources, scholarships, grants and work study programs. These may also be subsidized by the U.S. government or unsubsidized depending by financial need. Nearly all students are eligible for these loans.
Subsidized loans have the interest paid for by the government while the student is enrolled full time. Unsubsidized loans accrue interest while the student is in school and that interest must be paid on top of the loan once the student graduates. Once a loan is acquired there is a six month grace period after graduation before the student must begin to pay the loan back.
Limits for federal loans are as follows: $3500 per year for Freshmen $4500 per year for Sophomores $5500 per year for Juniors and Seniors $8500 per year Subsidized Stafford Loans for Graduate students $12,500 per year Unsubsidized Stafford Loans for Graduate students $6000 per year Perkins Loans
Private Student Loans
Not guaranteed by the U.S. Government, these loans can come through one of two channels: school-channel or direct to consumer. By way of school channel, the loan is paid directly to the school who then certifies it. These loans have a lower interest rate but may take time to tap into.
Direct to consumer private student loans are not certified an are paid directly to the borrower. The borrower has near immediate access to the money, them amount is at the student's discretion but the interest rate is a great deal higher on these types of loans. Most private loans carry an origination fee – a one time charge added to the rate of the loan by the lender, based on the loan amount. Benefits vary depending on lender, but some may offer deferments or forbearances. Companies like Astrive, and Think Student Loans and other offer these forms of student loans which are sent directly to lenders.