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College Loans - Student Loans


What is a student loan?

There are many different types of education loans. Learn about federal and private education loans so that you can find the right loan to help pay for your education.

Federal education loans
Federal programs are the single largest source of education loans. The two primary programs are the Federal Family Education Loan Program (FFELP) and the William D. Ford Federal Direct Loan Program (FDLP). The loans available through these programs start with the same terms; however, in the FFELP, your bank, credit union, or school is the lender, and in the FDLP, the U.S. Department of Education is the lender.

Listed below are some of the more widely used federal education loans.

Federal Perkins Loans.
Federal Stafford Loans.
Federal Parent Loans for Undergraduate Students (PLUS).

Private education loans
Private education loans are not sponsored by government agencies, and are offered by banks or other financial institutions. These loans are also available from a variety of sources to provide supplemental funding when other financial aid does not cover costs.

Other private supplemental loans are available and in some cases are tailored to specific courses of study. Some examples include:

Signature Student Loans

Types of federal student aid

What are PLUS Loans?
They’re loans you can take out to pay for your child's education expenses if they are  a dependent undergraduate student enrolled at least half time. Also, you must have no adverse credit history.

Q) How should we  apply?
For a Direct PLUS Loan, you must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your school’s financial aid office.

You are encouraged to have your  dependent children file a FAFSA, so they can receive the maximum student aid they’re eligible for.

Q) Can we apply get both a Direct PLUS Loan and a FFEL PLUS Loan for our child?

You can apply for either a Direct PLUS Loan or a FFEL PLUS Loan, at a time. but not for both for your child  during the same enrollment period. However, you can apply for a Direct PLUS Loan for one of your children and a FFEL PLUS Loan for another.

Q) Do we need to find a lender?
Under the FFEL Program, you will need to find a participating lender. but Not if you borrow under the Direct Loan Program, because their lender will be the U.S. Department of Education. Your child's school assists the federal government in administering the Direct Loan Program by distributing the loan application, processing the loan, and disbursing the loan funds.

NOTE: Your child's  school can refuse to certify your loan application, or can certify a loan for an amount less than your child would otherwise be eligible for, The school’s decision is final and cannot be appealed to the U.S. Department of Education.

Q) Are there any borrowing requirements that we  have to meet?
Yes, generally you  have to pass a credit check. If you don’t pass, you might still be able to receive a loan if someone, such as a relative or friend who can pass the credit check, agrees to endorse the loan and promises to repay it if you don’t.  you must meet citizenship requirements to  be eligible

Q) How much can my we borrow?
The yearly limit on a PLUS Loan is equal to your child's cost of attendance minus any other financial aid he/she receive. For example, if his/her cost of attendance is $6,000 and he/she receive $4,000 in other financial aid, you could borrow up to—but no more than—$2,000.

Q) Is it ever possible to postpone repayment of a PLUS Loan?
Yes, under certain circumstances, you can receive a deferment or forbearance on their loan, as long as the loan isn’t in default. Generally, the conditions for eligibility and procedures for requesting a deferment or forbearance that apply to Stafford Loans also apply to PLUS Loans. However, since all PLUS Loans are unsubsidized, you will be charged interest during periods of deferment or forbearance. If you don’t pay the interest as it accrues, it will be capitalized.

Q) Other than interest, is there a charge to get a PLUS Loan?
You will pay a fee of up to 4 percent of the loan, deducted proportionately each time a loan disbursement is made. For a FFEL PLUS Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency to help reduce the cost of the loans. For a Direct PLUS Loan, the entire fee goes to the government to help reduce the cost of the loans. Also, if you don’t make your loan payments when scheduled, you may be charged collection costs and late fees.

Q) Do we get the money or my child?
Either the U.S. Department of Education (for a Direct PLUS Loan) or your lender (for a FFEL PLUS Loan) will send the loan funds to his/her school. Their school might require you to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount. The funds will first be applied to your tuition, fees, room and board, and other school charges. If any loan funds remain, you will receive the amount as a check or in cash, unless they authorize the amount to be released to you or to be put into your school account. Any remaining loan funds must be used for their education expenses.

Q) What’s the interest rate on PLUS Loans?
The interest rate could change each year of repayment but does not exceed 9 percent.

Q) When do we begin repaying a PLUS Loan?

There is no grace period for these loans Generally, repayment must begin within 60 days after the final loan disbursement for the period of enrollment for which you borrowed. . This means interest begins to accumulate at the time the first disbursement is made. You must begin repaying both principal and interest while your child is still  in school.

Q) How do my parents pay back the loan?
For Direct PLUS Loans, you can choose the Standard, Extended, or Graduated Repayment Plan.
For FFEL PLUS Loans, you can usually choose the Standard, Extended, Graduated, or Income Sensitive Plan. FFEL PLUS Loans can also be consolidated.

Q) Can a PLUS Loan be discharged (canceled)?
Yes, under certain conditions. A discharge releases you from all obligation to repay the loan.

Student loan consolidation programs allow for a borrower's loans to be paid off and a new consolidated loan created.

These programs simply loan repayment by combining several types of Federal education loans into one new loan. The interest rate may be lower than on one or more of the underlying loans.








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