Financing College - Loan Types
Federal Student Aid
A student loan is for college and requires that the student and parents go through some steps to see how the student qualifies. Typically in early January of their senior year students and parents fill out the FALSA form, which comes from the Department of Education. This form can also be filled out online.
The Free Application for Federal Student Aid or FALSA is one of best sources to help pay for college. The form lets schools examine the financial position of a potential student, and then they use that data to determine the amount of money the student can borrow.
This form is the first step in receiving state, federal and school specific funding for college. It tells each school how much money to allot for loans, grants and scholarships. The parents and the students also visit the college of their choice to fill out more paper work before the student is granted a loan or grant.
The Department's Federal student aid programs are the largest source of student aid in America. They also give grants based on need and for minorities.
Pell Grants are the largest source of federal grants based on finanancial need. Families have to have completed income tax forms before they can fill out the FALSA, as need is based on this information.
- What determines a student’s eligibility for this loan?
- For most loans they must demonstrate a financial need.
- They must have a high school diploma or a GED, pass an ability-to-benefit test and meet any criteria from their home state.
- They must be accepted as a student in their college of choice. In addition to graduation they must have taken the SAT or ACT receiving a satisfactory score.
- They must be a U.S. citizen or eligible non-citizen which means a refugee, asylum granted, Cuban-Haitian, status pending, conditional entrant valid only if granted before 1980, a victim of human trafficking or a parolee that has been paroled into the U.S. for at least one year, and you must prove you intend to become a U. S. citizen.
Once you have filled out the FALSA and given a copy of your income tax, the family’s financial information is analyzed using the federal need formula. Then the Student Aid Report (SAR) form contains all the data you entered on the FALSA, and the Department of Education will send it to you via email or postal mail.
- This is a time you make sure there are no errors on the paper work.
- The form highlights items that may need your to complete.
- Submit the corrected SAR form back to the Department of Education,
- Keep a copy for yourself.
- At the upper right front of the page there is an area that lists Expected Family Contributions, which is an estimate of the amount your family can contribute. his form is also sent to the state.
Many students receive Pell Grants which help children whose parents can’t contribute.
Everything You Need To Know About Student Loans
Once a student qualifies for a loan they can choose which institution to make the loan. The best thing to do is make a comparison of the loans, taking into consideration the interest rate and the repayment requirements. You will want to know if there are any hidden fees. You can get a list of lenders from their school.
The Federal Perkins Loan Program provides low-interest loans for needy students financing the costs of post secondary education.
Students can receive Perkins loans at any one of approximately 1,800 participating post secondary institutions. Students who undertake certain public, military, or teaching service employment are eligible to have all or part of their loans canceled.
Stafford and GRAD PLUS Loans
Stafford loans are popular as they have low interest rates and their repayment benefits are attractive. For example, students can defer repayment if they attend graduate school or they can renegotiate loan terms to stretch them out or lower their payments. Plus, this loan is available to undergraduate, graduate, and professional students.
There is also the GRAD PLUS loan, for graduate school, where you can borrow up to $20,500 a year. You must have good credit or have a parent as a co-signer. The current 20187-2018 interest rate is 7 percent, plus there is a loan origination fee, and interest begins once the load is dispersed. Payments are not due until you graduate. You may find a lower interest rate in the private lending market.
Florida's Bright Scholarship Program
In Florida they have the Bright Futures Scholarship program. To be eligible for their scholarship program the student must make good grades and get a good score on their ACT test.
The amount of money received depends on your performance. To keep getting the scholarship money you have to keep your grades up. Other states have similar programs, so be sure to see what is available in your state.
Student Loans : About Government Student Loans
Certainly there are many institutions that offer private loans or student loans with parent’s co-signing. There are many programs available for scholarships and grants.
This article was primarily designed to explain the U. S. Department of Education funding as this is the most popular procedure for a college student loan.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.