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Student Financial Aid Overview

Most students require financial aid to fund their college education. In recognition of this and to promote education, the federal government created a coordinated effort to provide students with financial assistance through a unified application called Free Application for Federal Student Aid (FAFSA). This application has become the foundation upon which most students are evaluated for federal, state and private financial aid.

Even if you feel you will not be eligible for federal aid, it’s very important to complete this application on a timely basis. Once your college Financial Aid Office receives this, they will be able to produce a financial aid package for you. This aid package clearly states the financial requirements and allows you to plan the sources of funding you will be using for your education.

A financial aid program provides monetary support for aspiring students to help meet the costs of procuring an appropriate college education. The federal and state governments, individual colleges and universities and a variety of other public and private sources provide funding for such programs.

The majority of financial aid programs, particularly public-funded aid, are awarded on the basis of financial need. This is determined on the basis of the FAFSA application data processed through a prescribed federal formula.

There are four fundamental types of financial aid programs available. The first category refers to special grants in which federal financial aid is in a way ‘gifted’ to the student without any obligation for work or repayment. The next type of financial aid is in the form of student loans wherein a loan is provided and there is a fixed time frame for its repayment. The third type of financial aid is scholarships, where financial assistance is gifted to the student for excellence in different fields such as sports, academics and extra curricular activities, with no obligation for repayment. The last involves a work and study structure where students are required to work part time while attending an institution. A combination of the above options may also be used to form a package for providing financial aid.

Student Loan Consolidation

Consolidating Student Loans for Easy repayment

Using consolidation you can take multiple outstanding loans and refinance them into one single loan. This resulting loan is used to pay off the pending loans and has different terms. The repayment terms can extend as long as 30 years, reducing monthly payments by almost 50% as compared to what you were paying before. However, longer terms means that your borrowing costs go up significantly. Consolidated loans that result from this process may be tax deductible.

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What Type Of Loan Rates And Repayment Terms Should I Expect

Scholarships and grants typically don’t support the entire education cost of most students. There are many student loan options available. It is not always advisable to select the one that offers the lowest interest rate and a greater payback period.

As an example the rates of interest for student loans for the year starting from July 2006 to June 2012 are 6.8% and 8.5% for Stafford loans and PLUS loans respectively. These rates are likely to change every 6 months so, you should consult a financial aid officer who can help you manage the payback risk. Perhaps the most critical decision about student loans deals with deferment of payments. If loans are not paid at all during the school years their interest collects and compounds during the deferment term. Many web sites have calculators that allow you to determine total loan cost based on the selected deferment option.

The repayment period for federal loans includes a grace period of 6 months for a Federal (FFEL) or Direct Stafford Loan and 9 months for a Federal Perkins Loan. This grace period is applicable after you finish your graduation or school or drop below half-time enrollment. Parents holding a FFEL or Direct PLUS Loan do not enjoy the benefits of a grace period. Their repayment period starts within 60 days of the loan being disbursed.

For private or alternative student loans, the interest rates are mostly fixed at Prime + levels. However, check with your lender about interest rates before applying. Some lenders are able to offer these loans at Prime Rate.

Repayment of private or alternative student loans can be done after you complete your education, so long as you preserve at least half-time status as a student. If you are unemployed, the repayment may be deferred in 6-month increments. The maximum number of deferments is typically 4 increments; 2 years. You can also repay while you are attending school or have the option of consolidating the loan, thereby lowering your monthly payments and saving money.

Rating The Best Student Loans

The Free Application for Federal Student Aid (FAFSA) application forms the basis for almost all lenders that are likely to grant student loans. Therefore, it is vital to always fill out the FAFSA application on a timely basis. It is also very important to coordinate your efforts in seeking a loan with the Financial Aid office of the college you will be attending. The best loans available to students are those which are federally guaranteed or subsidized. Most states also have such subsidized and guaranteed loans. When you have a clear understanding of the subsidized loan options and there remains a need to finance your education, then most students consider commercial loan options.

There are numerous types of student loans and a person cannot possibly review them all. What is needed is a quick way to rate the best student loans. To do so, first of all you need to rate your personal financial situation and needs. Questions that you might want to ask yourselves are, What are your budgetary constraints, how much money will you require once the scholarships come through and what are you willing to put down as collateral.

Once this is done, you rate the loans according to your needs. Thus, if your need is to take care of your family and pursue your educational dreams at the same time, try for a student loan that takes your dependents into consideration and rate it as the best. If you are doing a course to get a desired promotion at work, instead of considering low interest student loans go for short-term repayment student loans. If you are living in with family, then you might not have to consider boarding and lodging expenses and in such cases, a basic tuition loan can be rated as the best one for you. By these examples you can see that your personal situation determines the best type of student loan for you.

You are the only one who can perfectly comprehend your situation and make decisions accordingly. Whether you choose a federal loan or try to get an alternative (private) student loan, you have to consider what amount you will be in a position to repay after you complete your education. A lot of information is available online, so start early, take your time and rate your alternatives wisely.

SELECTING THE BEST STUDENT LOAN FOR YOU

A large number of students are constrained to fund their own education. However, most cannot fund the expenses out of their own savings and hence resort to monetary assistance. There are a number of options to fund your education, namely scholarships, student loans and financial aid. However, it is not easy to receive a scholarship as the numbers of scholarships are limited as compared to the applicants. Sometimes, the only available solution is to opt for a student loan.

When selecting a student loan for yourself, choose the one that offers the best value for money after all up-front costs, taxes and monthly installments are considered. It goes without saying that you should select a loan that offers the lowest rate of interest. The mode and tenure of payment, along with the collateral involved, should all be predetermined before finalizing the loan.

There are 2 basic types of student loans, namely Federal Education Loans and Alternative or Private Loans. Under the Federal Education Loans, there are 4 sub categories: Federal Stafford Loans for Students, Federal PLUS Loan for Graduate Students, Federal Consolidation Loan and Federal PLUS Loan for Parents of Undergraduate Students. Under the Alternative or Private Loans, there are several categories like Signature Student Loan, Law Loans, Bar Study Loans, Continuing Education Loans, Private Consolidation Loans, MBA Loans, Tuition Answer Loan and Community College Loan.

From all these available options, two of the most popular loan programs are the Federal Perkins and the Subsidized Stafford Loan because under their terms the student loan interest rates are applicable only after the student graduates. The Federal Perkins has a low fixed rate of interest and is only offered to financially needy students. The Subsidized Stafford Loan has an interest rate not exceeding 8.25% and students do not have to pay any interest while at college.

You should gauge the costs of each loan and after a careful evaluation. Pick the one that best suits your individual needs.

BestLoans4Students

BestLoans4Students.com is the leading online resource for information regarding student loans and financial aid. We are dedicated to helping you find the best and most useful information possible. To do that we have created a web-based community, complete with expert advice and content. This content is updated regularly as we are continually adding more and new information to our site.

As a gathering place for those seeking assisted living help for themselves or for others, BestLoans4Students is the perfect spot to start the process of learning more about the cost of paying for college, federal student grants, rating the best student loans and selecting student loans and financial aid that fit your needs. Experts in each field share their knowledge in individual categories, making it easy for you to be informed. In addition, you can learn from others as they share their personal experiences.

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