Federal Student Loans: A handy helper.
February 16, 2015 governmentgrants.info Staff
Perhaps the most important consideration when looking at college is funding. The U.S. Department of Education has two programs to help students from every background achieve their dream of completing a degree: William D. Ford Direct Loan Program, and the Perkins Loan Program. The differences between these programs and the loans they offer are the lender, the borrower, and their eligibility requirements. Each type of loan also has a maximum lending amount, and students and parents may be eligible to borrow from different lenders.
With the Direct Loan program, four categories of loans are available to consider. First, Direct Subsidized Loans are available from the government to undergraduate students based on individual need, the student’s year in school, and other factors. The maximum disbursement per year ranges from $5,500 to $12,500. Until six months after graduation, or if the loan is deferred, the government will pay the interest on the loan as it accrues. Second, Unsubsidized Loans are available from the government to students without demonstration of need. Undergraduate students can borrow up to $5,500 to $12,500 per year, and graduate students can borrow up to $20,500 per year. The student is responsible for repayment of all principal and interest. Third, Direct PLUS Loans are offered by the government to the parents of dependent students to help pay for expenses not covered by financial aid. After a credit check, parents can borrow the remainder not yet covered by other types of financial aid. Finally, Direct Consolidation Loans allow students with loans from multiple servicers to transfer them to a single holder. The loans can then be repaid with a single monthly payment.
The Perkins Loan Program allows undergraduate and graduate students who demonstrate exceptional financial need to borrow money directly from their school. Depending on individual need, other aid received, and availability, undergraduate students can borrow up to $5,500 per year, and graduate students can borrow up to $8,000 per year. Because these loans are furnished directly by the schools, eligibility requirements may be more stringent than the Direct Loan Program.
An extremely helpful resource in developing a plan for college, and an important stop during college visits, is each university’s Financial Aid department. Keeping in touch with an advisor will help in planning and following through with repayments.