Where to Start
Fellowships & Grants
More often than not you won't be able to completely pay for your tuition with
scholarships, grants, and work-study. You're going to have to fill the financial
aid gap with student loans. Don't worry about taking out a loan, most students
do. In fact, few students can afford to pay for college without some form of
financing. The typical undergraduate student finishes college with $16,500 in
are many loan programs available and sometimes picking the best one for you can
be hard. Check out all your options and talk to your financial aid counselor.
They'll help you sort through the options and pick the best solution for you.
Also, remember you must submit a new Free Application for Federal Student Aid
(FAFSA) every year.
Consolidation Loans -
A consolidation loan allows you to lump all of your loans into one loan for
simplified payment. These loans combine your federal loans into one new
Direct Loan from a single lender. A Consolidation Loan reduces the size of your
monthly payment by extending the term of your loan.
- Who is eligible: Anyone eligible for FFEL or Direct loans
- How to apply: Submit the FAFSA.
- Maximum award: Depends on financial need.
Federal Family Education Loan Program (FFEL) vs.
Federal Direct Student Loan Program (FDSL) -
- FFEL funds are provided by private lenders, such as banks, credit unions and
savings and loan institutions. They are guaranteed by the federal government
against default. They usually offer students flexible repayment options.
- FDSL funds are provided by the U.S. government directly to you and your
parents through your school.
Both FFEL and FDSL loans are easy to qualify for. You usually must be at
least a half-time student in addition to meeting certain restrictions. Both the
FFEL and FDSL loan programs offer lower interest rates
and more flexible repayment plans than most consumer loans. This makes federal
loans a good way to finance your eduction.
Perkins Loans -
These loans belong to a special class of federal loan and are intended to
provide extra assistance for students with extreme financial need. They
are subsidized, long-term, low-interest loans. The loan is made with combined
funds from the government and your school.
- Who is eligible: Undergraduate and graduate/professional students who
demonstrate exceptional financial need.
- How apply: Submit the FAFSA.
- Maximum award: Undergrads may receive $3,000 per year, totaling no more than
$15,000. Schools that participate in the Expanded Lending Option (ELO) may also
offer higher loan limits for Perkins Loans.
PLUS Loans -
These low-interest loans, are available to parents to pay for their children's
education. The current rate is capped at 9 percent. Like Stafford Loans, PLUS
Loans are administered by both the FFEL and FDSL programs. PLUS loans are the
responsibility of parents to pay, not students.
- Who is eligible: Parents of dependent undergraduate students. Potential
borrowers usually have to pass a credit check. In cases where they don't, they
must prove extenuating circumstances or get a relative/friend to endorse the
loan for them.
- How to apply: Parents submit an application.
- Maximum award: As much as needed.
Private/Alternative Loans -
There are also loans that allow you to borrow college money from private banks
- Who is eligible: Independent students and parents of dependent students who
meet the criteria of the specific institution.
- How to apply: Through private banks lenders.
- Maximum award: Depends on the institution and the cost of your education.
|Student loans can really help out, but
make sure you understand the terms of your loan before you sign on.
Stafford Loans -
These are low-interest loans, that are given as part of the FFEL and FDSL
programs. The Stafford Loan was started to provide loan options to students who
normally wouldn't be able to take out a loan because of a lack of credit
history. The current interest rate on Stafford loans is capped at 8.25
There are two types of Stafford Loans, subsidized and unsubsidized.
Subsidized loans don't accrue interest until after you leave school. While you
are in school the federal government pays the interest on a subsidized loan.
With an unsubsidized loan, you pay the interest that accrues during your time in
college. Unsubsidized loans are open to anyone, regardless of financial need,
but subsidized loans are only offered to students who demonstrate financial
- Who is eligible: Dependant or independent undergraduate or graduate students
who demonstrate financial need (subsidized) or don't (unsubsidized).
- How to apply: Submit a FAFSA.
- Maximum you can get: Dependent undergrads can borrow up to $2,625 freshman
year, $3,500 sophomore year, and $5,500 each remaining year. Independent
students can borrow an additional unsubsidized $4,000 the first two years
and $5,500 the remaining years. Graduate students can borrow $18,500 per year,
although only $8,500 may be subsidized. The cumulative max for undergrad and
grad is $65,000 in subsidized loans and $138,500 in subsidized and unsubsidized
Loan Forgiveness -
Loan forgiveness programs allow your loans to be paid off in exchange for volunteer
work or military service. These are a feasible option for easy repayment. If you are
considering this type of program that usually means you're having
difficulty repaying your education loans. Make sure you read about Defaulting
on Student Loans.