Federal
Loans
Federal
Stafford Loan
Stafford Loans are low interest loans provided by the federal government.
Stafford loans are either subsidized or unsubsidized.
Subsidized
Stafford Loan
Subsidized loans are awarded to students based on financial need. The
term subsidized means that the federal government will pay the interest
on the loan while you are in college, during qualified deferment periods,
and a six month grace period upon completion of college.
The amount
of loan is determined by the students’ grade level and whether
the student is dependant or independent. For the first year a dependant
student can be awarded up to $2,625, in the second up to $3,500 and
during the third to fifth year up to $5,500. An independent student
can be awarded up to $5,625 in the first year, $7,500 in the second
year, and up to $10,500 in the third to fifth year.
*TIP
If you are awarded a subsidized loan and you don’t think you’ll
need it, accept it anyway. Deposit the money into a high yield account
that is FDIC insured. That way the government pays the interest on your
loan while you make interest on it. When the end of the grace period
approaches, pay back the entire loan. In that time you could make several
hundred dollars in interest without any risk. Read more on how to get
$25 free when opening a Orange
Savings Account.
Unsubsidized Stafford Loan
Unsubsidized Stafford Loans are available to students regardless of
family income. Unlike subsidized loans, students are charged interest
from the initial disbursement of the loan until the loan is paid off.
Interest that is not paid is capitalized, which means that the interest
is added to the loan balance and interest is charged on the total amount.
Unsubsidized loans are based on the students’ grade level.
A first year
student may be awarded $2,625, $3,500 in the second year and $5,500
in the third to fifth year.
*Remember-
Although you may be awarded loan based on your assessed need, you do
not have to accept it if you don’t need it. Only accept what you
need, because you will be charged interest on unsubsidized loans until
they are paid in full.
Federal Perkins Loan
The Federal Perkins Loan is a need based loan with low interest rate
of 5% for undergraduate and graduate students. The school is the lender
and repayment is made to the school, not the federal government. Disbursement
is either by deduction of tuition from your balance or payment by check.
Depending
on your level of need and the funds available from your school, an undergraduate
can borrow up to $4,000 for every year of undergraduate study up to
a maximum of $20,000. If you are at least a half time student you do
not have to pay back the loan while you are in school and you have a
grace period of nine months after you graduate, leave school, or attend
school less than half time.
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