<p>Soooo I didnt qualify for cal grants or pell grants, but I was wondering what the difference was between a federal student loan and well a regular loan i guess.
Is there even a difference at all?
And how would i apply for a federal loan?</p>
<p>A federal loan (aka Stafford) is offered to all students who file FAFSA and is in the student’s name alone, therefore no cosigner is needed. The annual limits are $5500 for freshmen, $6500 sophomore, and $7500 for juniors/seniors. Of that amount, up to $3500 of first year ($4500 2nd, and $5500 3rd/4th years) may be subsidized by the government until you stop attending at least half time (I think) or graduate. That means the interest does not start building on that portion of the loan. Repayment of federal loans starts 6 months after you leave school and there are various repayment options (the traditional one is a fixed 10 year option) and there are several forgiveness options (10 year public service, high need teaching, 25 year, or death of the student). The minimum monthly payment is $50.</p>
<p>Rates on unsubsidized Stafford loans are 6.8% Subsidized loan rates are 5.6% for next year, then 4.5% in 11/12, 3.4% in 12/13, and then are slated to go back to 6.8%. You apply for Stafford loans by completing entrance counseling and accepting the loan - all of this is usually done on the college’s website if they are a federal Direct lender. (Recently enacted legislation will make all college’s direct lenders.) If they are not yet, then you choose the bank/lender (the school will likely have a list somewhere on their website for you to start with, but you can do this with any lender that participates). There is a small fee - around 1.5% of the loan for direct schools, I think, which is deducted up front.</p>
<p>The other federal loan for undergrads is the Perkins loan, but the school must offer you this loan in order to receive it. It’s currently a 5% subsidized loan, but may soon become an unsubsidized loan. That full subsidy, and the 9 month grace period after leaving school, is the major difference. Either loan must be first accepted (as with other financial aid) by you. The minimum monthly payment is $40.</p>
<p>Private student loans usually are made to students needing funds beyond the Stafford limits (a bad idea, imo), but sometime a better rate can be found if the cosigner’s credit is excellent. This does put the cosigner “on the hook” for the loan amount for a long time though and may impact their ability to get other credit during that time. You would have to arrange this through an outside lender.</p>
<p>You can find tons of loan info and loan calculators on finaid.org.</p>