<p>For example, Stafford loans, direct parent loans (PLUS), federal perkins loans, pell grant, SEOG, and any others you know of! Thank you!</p>
<p>Pell grant and SEOG are not loans.</p>
<p>SEOG and Pell are grants for low income students. They are not loans.</p>
<p>Stafford loans come in two forms. Subsidized Staffords are given to students with financial need. The interest does not accrue while you are a student. In subsidized Staffords the interest accrues when the loan is disbursed. Stafford loans are available to students who complete the FAFSA with no cosigner needed. The freshman limit is $5500.</p>
<p>Perkins loans are limited funding loans awarded by colleges to low income students. They are federally funded loans as well. Colleges receive a limited amount of money for these loans. They are also student loans.</p>
<p>Parent Plus loans are loans that are taken out by parents to help fund college costs. Assuming the parents qualify, the amount available is up to the cost of attendance. Interest starts to accrue when the loan is disbursed.</p>
<p>Pell and SEOG are not loans. They are need based grants and do not have to be repaid.
- Pell grant. Need based. Requires a low EFC (so low income) between 0 and around 4620 ish. The maximum per year is currently $5500 and requires a 0 EFC. AS EFC goes up, Pell goes down.
- SEOG is a need based grant and requires a low income. It is one of 3 campus based aid programs. This mean a school is given $xxxx in SEOG funds and decides how best to allocate them. Each school will have its own criteria and own maximum. Many schools require a 0 EFC for any SEOG. The maximums SEOG will vary by school - my son’s school offered $100 maximum while my daughter’s offered $2,000. Schools generally have more eligible students than they have funds, but once they have awarded the funds they can get no more.
- Stafford loans and direct student loans are the same loan by different name. They are federal student loans. They may be subsidized or unsubsidized. Subsidized requires that their be unmet financial need as determined by FAFSA and your school’s COA. The maximum direct loan for a dependent freshman is $5500 of which up to $3500 may be subsidized if there is need. Direct student loans have a 1% fee. If a student’s parent applies for and is denied a PLUS loan, the student is eligible for an additional $4000.
- Subsidized direct loans have an interest rate of 3.4% meaning the govt pays the interest while you are in school. Repayment starts 6 months after you graduate or drop below half time.
-Unsubsidized direct loans have an interest rate of 6.8%. You are responsible for the interest from day 1 though you can defer it until repayment starts in which case it is added to the loan. Repayment starts 6 months after you graduate or drop below half
time.
**4. Perkins loans **are need based subsidized student loans. Generlly goes to low income students though many low income students will not get it. They have an interest rate of 5% meaning the govt pays the interest while you are in school plus a grace period of 9 months. Repayment starts 9 months after you graduate or drop below half time. Perkins loans are also campus based aid with very limited funding and schools often have insufficient funds for all who qualify. There is no origination fee.
5. Parent PLUS loans are parent loans. They have an interest rate of 7.9% and an origination fee of 4%.
6. Private loans are loans from private banks and can be borrowed by parents or by the student with a parent cosigning. Ultimately the cosigner is responsible for the debt as a cosigner with a good credit rating is required because the lender wants someone with income and assets they can go after if the student fails to pay on time (or at all). In my opinion, cosigning is a bad deal as it affects both the student and cosigner’s credit rating and the cosigner has little control even though they are ultimately liable.</p>
<p>So can a student receive his own Stafford loan and the parents do a PLUS loan at the same time?</p>
<p>Yes, but it is a very bad idea to take on that much debt. If you can’t afford a school with just Stafford loans it is too expensive. </p>
<p>Debt is evil.</p>
<p>Yes, a student can receive up to the grade level maximum in Staffod loans and the parents can also take out PLUS up to the COA (cost of attendance of the school) </p>
<p>The way our family tries to do this is with both the student and parents paying for the school using past, present and future earnings. We save, including the kids, we scrimp and try to pay what we can from current pay check, and our kids have worked at school part time and definitely the summers, and we borrow the remainder. We try to keep the borrowing to a minimum, if at all.</p>
<p>Some schools also have their own loans that they may offer and/or include in financial aid packages, plus some states have loan programs that may have lower interest rates and competitive terms to the Direct parent/student loans.</p>
<p>
This is a foolish oversimplification. A Parent Plus loan may be appropriate in a number of circumstances. We took out significant PP loans for S’s education because it made sense in light of our cash management needs at the time. They are being paid off in due course, as planned. A small, highly manageable PP loan may make the difference between attending a highly desired college and a far less appealing option. What’s “evil” is taking on debt without thoughtful analysis of one’s financial situation, including how subsequent years of school will be financed, who will be responsible for repaying the loans, and whether the payor will be able to manage the debt load. The horror stories we read about students with insane debt all result from heedlessness and stupidity. Financing an education requires careful planning and the consideration of all options.</p>
<p>
Let’s say:
You need to know how much student loans debt is too much for you too handle.</p>