Plan to borrow no more than your expected salary upon graduation. Find more tips about planning with a College Planning Calculator. Both loan types have borrowing limits, like many federal loans do. Both undergrads and graduate students can take these loans out, unlike subsidized Stafford Loans, which are only available to undergrads.
If you reach the maximum amount of borrowed funds over the course of your education, you are not eligible for additional loans. You can, however, repay some of your existing loans, and therefore fall below the aggregate loan limit. At this point, you may be able to borrow again. If you are a dependent student whose parents are ineligible for a Direct PLUS Loan federal loans that graduate students and parents of undergraduates can use to help pay for college , sometimes due to adverse credit history PLUS loans are subject to credit checks , you may be able to receive additional Stafford loans.
Federal student loans make up e majority of student loans today the federal government holds approximately Payments are due after you graduate, leave school, or change your enrollment status to less than half-time.
The payment is based on 15 percent of discretionary income, defined as the amount by which adjusted gross income AGI exceeds percent of the poverty line. The easier way to look at it: For many borrowers who qualify, the payment will be less than 10 percent of their monthly income. Graduated repayment starts with monthly payments that are just barely higher than interest-only repayment plans.
The monthly amount you owe increases every two years. After the borrower leaves school, they can combine two or more federal loans into a single Direct Consolidation Loan with a single monthly payment.
Additionally, if a borrower is struggling to make payments due to circumstantial hardship, like the loss of a job, they may qualify for loan deferment or forbearance for a certain amount of time.
This means they can temporarily stop making federal student loan payments or reduce the amount they pay, but there are drawbacks. If your loan is unsubsidized, the interest will continue to accrue at its regular rate and be added to the total loan amount. The submission period opens up every year on October 1. Clicking this button on this page takes you away from salliemae.
Any information you provide will be shared directly with Frank and will be covered under the terms of the Frank privacy policy. That means 1 in 4 families are potentially missing out on financial aid, or even free money, to pay for college.
File, file early, and file every year. Most of the counseling is online, though some schools require first-time borrowers to complete counseling in person.
If there are leftover funds, the balance will be refunded to you by check, cash, debit card, or electronic funds transfer EFT. This higher limit is designed to encourage qualified students to pursue degree programs in these critical fields of study.
Keep in mind that you can't borrow more than your total cost of attendance minus the amount of any Federal Pell Grant you receive and any other financial aid or scholarship you receive, so you may receive less than the annual maximum amounts [source: Student Aid on the Web ]. Low interest rates help make Stafford loans an attractive option for students looking for a way to fund their college educations. Since the federal government secures the loans, financial institutions are willing to lend at a lower interest rate than credit cards or private loans.
Currently, the rate on Stafford subsidized loans for the academic year is a fixed 5. You can pay the interest every month or defer it until you graduate, when it will be added to your loan balance. Graduate Stafford Loans subsidized and unsubsidized have a fixed rate of 6. There's good news for students who plan to start school between now and The College Cost Reduction Act of will drop rates to 4. The new rates will help students save thousands of dollars over the life of the loan [source: Androitis ].
After , the interest rates of subsidized Stafford loans are unknown. They're expected to rise to 6. In addition to interest, there's a fee of up to 1. And if you don't make your loan payments on time, collection costs and late fees may be added to the loan.
Once you complete your studies and begin your career, you'll need to budget carefully and work out a plan to repay your loan. The repayment period for a Stafford loan is usually 10 years.
Fortunately, Stafford loans allow a six-month grace period once you've graduated, left school or decided to enroll less than half time. During this time, you'll receive repayment information that will include your first payment due date.
Payments are usually due monthly, and they're paid to a private lender or loan servicer. If you choose to repay your loan balance early, perhaps with extra funds received from an inheritance or bonus, there are no penalties for early payment and you can reduce the amount of total interest. If you're having problems paying back your loan, you may quality for a deferment period on your loan during which no payments will be required.
If you're unable to make payments temporarily, perhaps due to poor health or job loss, your lender may be able to grant forbearance for a specified period. Finally, you may wonder if there are ever any conditions when your student loans may be cancelled or forgiven. It's possible, but only under very specific circumstances, such as death, disability, bankruptcy , or service in certain professions.
It's best to take responsibility for repaying that student loan, budget accordingly, build a solid credit history and help make it possible for the Stafford loan program to continue to back low-interest loans for students.
Stafford loans are either subsidized — the government pays the interest while you're in school — or unsubsidized — you pay all the interest, although most students will not start making these payments until after graduation.
Unsubsidized Stafford loans add the accrued interest to the loan balance, increasing the size and ultimate cost of the loan. To receive a subsidized Stafford loan, you must be able to demonstrate financial need.
All students, regardless of need, are eligible for the unsubsidized Stafford loan. As of July 1, , graduate and professional students are eligible only for unsubsidized Stafford loans.
Repayment on all Stafford loans typically begins six months after you graduate or drop below half-time enrollment. The standard repayment term is 10 years from the date of your first payment, but alternative repayment terms are available.
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