Present students are future leaders of our country. Thus, it is of prime importance that students receive right kind of education and made to work in right direction so that they achieve their goals and ambitions and prove to be assets to the society. Higher education is necessary to lead a successful life. It not only lands you a good job and decent career but also helps you grow personally. Many students are unable to pursue their higher education because of cost issues. To help offset some educational cost, the Department of Education has set up various loans that students can easily apply for at their high school, local college or online. Although there are many grants and loans available, one popular way that students can finance their tuition is by applying for the Federal Direct Stafford Loan. It is easy for students to qualify for this loan and the interest rates for undergraduate and graduate students are extremely low.
Colleges across the United States have joined the William D. Ford Federal Direct Loan (DirectLoan) program. Students who are enrolled, half or full time, are given the opportunity to accept or deny the the amounts of loans available to them. Usually, the amount of the loan will cover all their education expenses that includes tuition fees, books, room and board plus other allied education related expenses. To begin the loan application process, students must complete the Free Application for Federal Student Aid (FAFSA). Once all information on the application is confirmed, a SAR will be issued to the student and sent to the schools listed o the application.
There are two types of Federal Direct loans: Subsidized and Unsubsidized loans:
Subsidized loan vs. Unsubsidized loan
Subsidized Stafford loan is given based on the demonstrated financial need of a student. While the student is in school till the authorized deferment period, the federal government pays interests on such loans. Only undergraduate students can take subsidized loan.
Unsubsidized Stafford loan is given to undergraduate and graduate/ professional degree students without any requirement of demonstrating financial need. In this case, the interest accumulates and capitalized, thus, resulting in addition to the principal amount of the direct unsubsidized loan. The student is responsible to pay the interest that accrues.
Loan repayments usually begin six months after a student falls below half-time in college, drop out or graduate from college. This is considered a grace period. Once this grace or deferment period gets over, the borrower is supposed to repay the loan. Usually payments are expected to be made on monthly basis based on the repayment plan opted by the borrower. The federal government offers several repayment plans which are flexible in nature and the borrower can switch from one plan to other after making a formal request.
Federal Direct Loan Forgiveness
Under special circumstances, the government may forgive or cancel all or part of a student loan. There are also loan forgiveness or discharge programs for various occupations such as health professionals, teachers (Teacher Loan Forgiveness Program), volunteer work, military service and public interest law (Public Service Loan Forgiveness Program). The goal of loan forgiveness programs is to motivate individuals to take up occupation involving national importance, though they are low-salaried jobs and involve high cost in education.
Plus loans are available to help offset the current and future costs of college tuition. The Graduate Plus loan is a unsubsidized loan offered to previous graduates and not based on financial need, income levels or debt to income ratios. To qualify for the Plus loans, the borrower must have a good credit history. It is awarded to graduate/professionals or parents of undergraduate students.
For further information on various educational loans, eligibility criteria, interest rates, repayment plans etc, please click on the following link: https://studentaid.ed.gov/.