Category: Parent Student Loans
The Federal student loan program is called the Direct Loan program. This is a low interest loan for students and parents to help pay for education beyond high school.
The loan is issued by the U.S. Department of Education directly, and there are no banks involved with these loans. Because you are borrowing directly from the federal government you will be able to administer everything to do with your loans using the Direct Loan Servicing Center. This makes it easier especially if you have multiple loans from different schools.
There are a number of types of loans that fall under the Direct Loan Program and there are some important differences that you should be aware of about how they charge interest.
The subsidized loan is for students that have a financial need determined by federal regulations. With this loan there are no interest charges while the student is in school at least half time.
There is also no interest charge during the six month grace period following the completion or termination of classes, nor any deferment periods.
The unsubsidized loan is not based on financial need, and there will be interest charged as soon as the money is distributed. This means that even though you are not obligated to pay on the loan while in school, you will be charged interest during this period. You will also be charged interest during the six month grace period and any deferment periods.
The Plus loan is an unsubsidized loan for the parent of the student to help cover any educational costs not covered by any other financial assistance. Interest is charged during all periods for this type of loan.
There is also a Consolidation loan that combines any eligible federal student loans into one Direct Consolidation Loan.
This has the advantages to lower your monthly payments by spreading you loan out over a longer term. While you will lower your monthly payment, you will pay more interest because of the longer term.
You can apply for any of the Direct Loans by filling out the Federal Student Aid application online. The information in the application is transmitted to the school you list in the applications and is used to determine all financial aid that might be available to the student.
There are no required payments due until the student falls below a half time status and there is also a six month grace period after graduation or termination in most cases. We will cover payment requirements and options in future articles.
Question by Moonspell: Serious need of a funds for my schooling.?
I am here on a F1 student visa. I was comfortable as my parents were paying my expenses. But rescently the business of my parents crumbled down to pieces, he could no longer send me money. As a matter of face they are having a harsh time. So i need to find a job here to pay my fees. As i have invested much money in my studies, i cannot even go back to my country, i have to complete my degree. But, as it’s illegal to work here, what are the options available to me?
you might ask me to find on campus job or to get work permit for certain hours showing economic hardship, i have tried it all but in vain. Some of u might come up with an idea of loan but i have been told that it is better to be broke than to drown in loans.
“Man! being a broke F1 in US sucks.”
I would really appreciate if u could tell me any options i have.
Answer by nsecurenold
You could try getting loans that you don’t have to repay until after graduation.
Know better? Leave your own answer in the comments!
Big banks that offer private-label college loans are facing new competition from credit unions that are looking to issue their own private student loans.
Credit unions, in increasing numbers, are developing partnerships with private student loan companies like Sallie Mae and Credit Union Student Choice to deliver private student loan products to credit union members. In one such agreement, Southeast Corporate Federal Credit Union, which itself has more than 400 member credit unions, will offer private student loans through Sallie Mae.
Private student loans, non-federal education loans issued by banks and private lenders, are designed to assist students who have exhausted their federal student loan options. Private student loans can be used to cover up to 100 percent of a student’s approved educational expenses.
Credit Unions Offering Flexibility in Student Loan Programs
Some credit union private loan programs are being structured to appeal to families with more than one student in college by enabling parents to make multiple withdrawals on a single line of credit worth as much as ,000. In addition, credit union–backed student loans are eliminating loan origination fees and offer both in-school student loan repayment and deferred, post-graduation repayment plans.
In-school repayment options enable students to reduce the overall amount of interest their private student loan accrues before they graduate. According to Sallie Mae, students who begin college loan repayments while still in school can reduce their student loan debt by 30 to 50 percent over traditional student loan payment plans, which defer repayment until after a student has graduated or left school.
Investors Looking to Private Student Loans’ Long-Term Growth
The prospects for private student loan companies and student loan securitization are improving marginally. The National Credit Union Administration (NCUA) recently sold a bond worth nearly .2 billion that was backed by student loans, after previously relying on commercial and residential mortgages to secure its bond sales.
Credit rating agencies are less sure that private student loan companies represent a good risk; however, many analysts remain optimistic about the long-term investment potential of private student loans.
Fueling investor confidence in the longer-term prospect of the private student loan market is the growing demand for student financial aid as record numbers of students are entering college each year.
Federal Budget Cuts May Pave the Way for More Private Student Loans
Indeed, private student loans may gain market share in a more immediate future than analysts had been predicting.
On Capitol Hill, the U.S. Senate is currently struggling to pass a continuation of its earlier spending authorization to fund the Department of Education’s federal Pell Grant program, which awards government-issued college grants to financially needy and lower-income students. The current authorization expires December 18.
If the Senate fails to reauthorize the funding proposal at its current level, students who are eligible for a Pell Grant may find their Pell Grant award reduced or eliminated. With less Pell Grant aid available to them, many of these students would then need to take out more money in student loans in order to pay for college and complete their degree.
Congress is already considering elimination of the Pell Grant program altogether, as recommended by President Obama’s National Commission on Fiscal Responsibility and Reform.
The bipartisan panel, which recently forwarded its final report to Congress, recommended that the federal government reduce federal education grants based on a student’s pre-college family income in favor of more government-issued student loans, which would need to be paid back, replenishing the government’s coffers, and that would be more attuned to a borrower’s post-graduation earning potential.
However, spending appropriations for an expanded federal student loan program may face stiff opposition in the Republican-led House of Representatives.
As Congress wrestles with the funding needs and long-term future of both federal grant and federal student loan programs, private student loan companies are positioning themselves to fill in any emerging federal financial aid funding gaps.