If you are a
college-bound high school senior, this is application season for colleges and
scholarships. When your college acceptances start arriving in the months to
come, there may be a gap between the cost of attendance and your available
funds. That’s where student loans come in, and why 70% of students use them to
help pay for college.
Federal education
loans
Federal student aid
includes federal grants, the Federal Work-Study Program, and student loan
programs such as Stafford Loans, Perkins Loans, and PLUS Loans for parents and
graduate students.
To apply for all federal
student aid, you must file the Free Application for Federal Student Aid (FAFSA)
annually at
www.fafsa.ed.gov
after January 1. Since financial aid is awarded on a first-come,
first-served basis, it makes sense to apply early. About four weeks later,
you’ll receive a student aid report (SAR) with your expected family contribution
(EFC), the amount your family is expected to pay for one year of college. Each
college that accepts you prepares a financial aid package that may be composed
of federal, state, and direct aid from the school.
Federal Stafford Loans
are the most common student loan, and allow eligible students to borrow
low-interest, guaranteed (insured) loans. There are two kinds of Stafford Loans,
and both have annual loan
limits set by the federal government.
·
Subsidized Stafford Loans
are awarded based on a student’s
financial need as determined by the FAFSA process. The government pays the
interest during school, grace, and authorized deferment periods.
·
Unsubsidized Stafford Loans
are awarded regardless of financial need, and interest is charged immediately
upon loan disbursement. Students may pay interest during school or let the
interest accrue until repayment begins 6 months after leaving school.
Federal PLUS Loans for
parents are fixed-rate loans that
offer a sensible and affordable way for parents to finance a dependent,
undergraduate child's education without tapping into investments. There is no
income requirement to qualify, but the borrower must have good credit. Parents
can borrow up to the cost of attendance (minus other financial aid).
Private education
loans
Since Stafford Loans are
capped by annual borrowing limits, many students and their families turn to
private student loans (which are not need-based) for additional education funds.
Typically, no FAFSA is required for private loans. With competitive rates,
online pre-qualifications and applications, and flexible repayment options,
applicants can get fast credit decisions and lucrative borrower benefits.
For example, Nellie Mae,
Massachusetts’ #1 student loan lender and headquartered in Braintree,
Massachusetts, offers private EXCEL Loans for students and their families to
supplement their Federal Stafford and PLUS products.
Nellie Mae’s Student
EXCEL Loans allow dependent students with good credit to borrow on their own
(freshmen and those without good credit may apply with a co-borrower). No-fee
terms are available and no payments are required while you're in school at least
half time. Nellie Mae EXCEL Loans are for parents, independent students,
or other creditworthy sponsors who borrow on behalf of an undergraduate student.
Visit
www.nelliemae.com
to learn more about
federal and private loans
and the financial aid process. You can also download useful
brochures and
worksheets
that can help you prepare and pay for college.
