<p>I really need some information on loans. I see that there are two types of loans that most people seem to get.. the Stafford Loans and the Parent Plus Loans. I have already been told that we do not qualify for the subsidized Stafford Loan (which is based on need).. but I guess we will probably be able to obtain unsubsidized.. big deal $2625.00.. .not near enough. OR, can you get this unsubsidized loan for more than the $2625.00?? We are probably looking at taking loans in the amount of $16,500 PER YEAR for 4 years! I have used the calculators, etc and it seems like we are going to have to pay about $500/month for these loans (NOT doable!).. aren't there any loans where parents pay only the interest until child is out of school - we will be in a much better position financiallly to help with loan payments at that time.. what happened to paying college loans off after you graduate?.. it is really going to be tough for us to take on anymore monthly payments right now.. ANY information on loans that you have would really be appreciated.. am I missing something here.. is there a loan that D could take out herself and not have to pay on until after graduation? Thanks for any help you can give me.</p>
<p>Hey Isandin, I am wondering similar. However we are looking at 30,000 per year. I think
financialaid.com has explanations on loans. I worked on application process with D,(she got into all six choices) that seems a breeze compared to financial side. I feel like H and I need someone to walk us through this process!</p>
<p>There is a post in the Parent's Forum Borrower beware! (Student Loans) which you may find informative.</p>
<p>From Financialaid.com</p>
<p>Common Questions about Stafford Loans</p>
<p>What is a Stafford loan?</p>
<p>A Stafford loan is a government guaranteed loan offering low interest rates and deferred payment options. There are two types of Stafford loans - subsidized and unsubsidized. </p>
<p>What is the difference between a subsidized Stafford loan and an unsubsidized Stafford loan?</p>
<p>With a subsidized Stafford loan, the government pays interest on the loan until you graduate from college. To qualify for a subsidized Stafford loan, you must demonstrate financial need. An unsubsidized Stafford loan still offers you the same low interest rate as the subsidized version, but you have to pay the interest on the loan from the date of origination. </p>
<p>Who is eligible for a Stafford loan?</p>
<p>To be eligible, you must:
be a U.S. citizen or eligible non-citizen
have a high school diploma or GED certification
not be in default on any other student loans
be enrolled at least half time in an accredited degree program </p>
<p>How do I get a Stafford loan?</p>
<p>First, you must fill out the FAFSA (Free Application for Federal Student Aid) form at <a href="http://www.fafsa.ed.gov%5B/url%5D">www.fafsa.ed.gov</a> and receive your financial aid award package, which will outline what types of education funding you are eligible for, including Stafford loans. If you are eligible, you then can return to FinancialAid.com to apply for your Stafford loan by filling out our quick and simple online application. Once your information is submitted and processed, an application will be mailed to you. Simply sign, date and return in the enclosed envelope and you're all done! There is no credit check necessary when applying for a Stafford loan. </p>
<p>How much can I borrow with a Stafford loan? </p>
<p>If you are an eligible dependent student, you can borrow up to:
$2,625 freshman year<br>
$3,500 sophomore year (after one year of completed study)
$5,500 junior, senior, fifth year
$8,500 graduate/professional students </p>
<p>If you are an eligible independent student, you can borrow up to:
$6,625 freshman year (if you combine subsidized and unsubsidized loans, no more than $2,625 may be in subsidized loans)
$7,500 sophomore year (if you combine subsidized and unsubsidized loans, no more than $3,500 may be in subsidized loans)
$10,500 junior, senior, fifth year (if you combine subsidized and unsubsidized loans, no more than $5,500 may be in subsidized loans)
$18,500 graduate/professional students (if you combine subsidized and unsubsidized loans, no more than $8,500 may be in subsidized loans) </p>
<p>The total outstanding debt allowable under the Stafford loan program:
$23,000 dependent undergraduate student
$46,000 independent undergraduate student (only $23,000 may be in subsidized loans)
$138,500 graduate/professional student (only $65,500 may be in subsidized loans) </p>
<p>What is the interest rate on a Stafford loan?
Stafford loan interest rates are variable and are adjusted every July 1st (based on the 91-day Treasury Bill + 1.7% while you're in school, grace or deferment and + 2.3% during repayment). Stafford interest rates are capped and will not exceed 8.25% </p>
<p>Who offers Stafford loans?
Each college selects a federal loan program - either the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP). Both the FFELP and the FDLP offer Stafford loans. With FFELP, private lenders provide the loan funds. With FDLP, the government provides the loan funds. </p>
<p>What are the payment terms for a Stafford loan?
In addition to their low interest rates, one of the best things about both types of Stafford loans is that your loan payments may be deferred until six months after graduation. You typically have 10 years to pay off your Stafford loan and the opportunity to save additional money by consolidating your Stafford loans when you graduate. There are no prepayment penalties on a Stafford loan. </p>
<p>Is it ever possible to postpone repayment of a Stafford loan?
Yes. Under certain circumstances, students can receive deferment or forbearance benefits for their loan. If eligible, students may be able to postpone or reduce their monthly payments. </p>
<p>How are Stafford loans disbursed?
Typically, Stafford loan disbursements are sent directly to your school's financial aid office and distributed in scheduled payments during the academic term. Once the student's registration is confirmed, depending on the school, the funds will be deposited into the student's bank account or the student will be asked to pick up a check from the school's financial aid office. </p>
<p>Are there any charges for a Stafford loan?
There is a combined fee of up to 4% of the loan, comprised of a 3% origination fee that goes to the federal government and a 1% guarantee fee that goes toward the guaranty agency that insures your loans. These fees are deducted proportionately from each loan disbursement so that you aren't required to come up with any up-front money to obtain the loan.</p>
<p>Also from Financialaid.com:</p>
<p>What is a PLUS loan?
Federal Parent Loans for Undergraduate Students, also known as PLUS loans, are low-interest education loans that allow parents to fund the cost of their child's education. </p>
<p>A parent is eligible to borrow up to 100% of the estimated cost of their child's attendance, including tuition, room and board, books, transportation and additional expenses, minus any other financial aid awarded to the student.</p>
<p>Eligibility Requirements </p>
<p>Who is eligible for a PLUS loan?
To be eligible, you must:
be a natural, step or adoptive parent of a dependent student
be a U.S. citizen or eligible non-citizen and provide a valid Social Security number
pass a credit check </p>
<p>Eligibility also depends on the student. The student must:
be less than 24 years of age
have no dependents
be enrolled at least half-time
be unmarried </p>
<p>How do I apply for a PLUS loan?
FinancialAid.com makes it easy for you to apply for a PLUS loan. All you need to do is complete our short and simple online application. Next, one of FinancialAid.com's highly trained loan counselors will contact you within 48 hours to discuss the PLUS loan and to answer any questions you may have. Upon your approval, the loan counselor will obtain and evaluate your credit report to determine your eligibility. Once the credit check is approved and application information is verified, an application will be mailed to you. Simply sign, date and return in the enclosed envelope and you're all set! </p>
<p>If this is your first time learning about your PLUS loan options and your child has already begun their college education, don't worry! Parents may apply for a PLUS loan retroactively to cover educational costs they've already incurred for the current school year. Simply stated, parents can take out a loan equal to the total out of pocket expenses paid for their child's school-related costs. </p>
<p>Is there a credit check involved?</p>
<p>Yes. In order to obtain a PLUS loan, you will be subject to a credit evaluation verifying that you have no adverse credit history. A parent with adverse credit history can still qualify for a PLUS loan by securing an endorser who must pass all credit requirements. </p>
<p>How much can I borrow?</p>
<p>A parent is eligible to borrow up to 100% of the estimated cost of their child's attendance, including tuition, room and board, books, transportation and additional expenses, minus any other financial aid awarded to the student. </p>
<p>How will the loans be disbursed?</p>
<p>PLUS loan disbursements are sent directly to the school. The school will then verify the student's enrollment and apply the funds toward tuition, room and board, and other additional expenses. If there is any remaining money, it will be sent to the parents unless the school is authorized to release the funds to the student or place them in a school account. </p>
<p>What is the interest rate on PLUS loans?</p>
<p>Interest rates on PLUS loans are variable and adjusted every July 1st (based on the 91 day T-Bill + 3.1%). PLUS loan interest rates are capped and will not exceed 9%. </p>
<p>Are there any pre-payment penalties on PLUS loans?</p>
<p>No. There are no pre-payment penalties. In addition, any amount paid over your minimum payment will be applied directly to principal and not interest. </p>
<p>What are the repayment terms of a PLUS loan?</p>
<p>The repayment term for a PLUS loan is typically ten years. Loan repayment begins within 60 days of the final loan disbursement. At that point, you will also be eligible to save money by consolidating your loans and locking in the low interest rates. </p>
<p>Is it ever possible to postpone repayment of a PLUS loan?</p>
<p>Yes. Under certain circumstances, parents can receive deferment or forbearance benefits for their loan. If eligible, parents may be able to postpone or reduce their monthly payments. </p>
<p>Are there any charges for a PLUS loan?</p>
<p>There is a combined fee of up to 4% of the loan. For PLUS loans, there is a 3% origination fee that goes to the federal government and a 1% guarantee fee that goes toward the guaranty agency that insures your loans. These fees are deducted proportionately from each loan disbursement so that you aren't required to come up with any up-front money to obtain the loan. </p>
<p>Why do financial experts recommend the PLUS Loan?</p>
<p>Many people take advantage of the PLUS loan due to the low interest rates and favorable repayment terms. With simple interest rates as low as 2.17%, many families place the money that they were going to use for college into investments that earn more compounding interest.</p>
<p>The PLUS loan is not income sensitive; this means that family income is not a factor when determining eligibility. .</p>
<p>How can interest be 2.17% if the rate is determined by the 3 month T-bill rate plus 3.1%? That adds up to almost 5%</p>
<p>When they say that repayment begins after final payment , what does final payment mean? 4 years or each year or final payment of what ever length you took the loan out for?</p>
<p>if you took a plus loan out for 2004-2005 example
THe payment is divided between half for fall semester and half for spring.
As soon as they pay the school for spring semester ( Jan?) you are expected to begin paying back the loan.
Each year is a new set of payments and new loan.
this at least is how our Plus loan worked</p>
<p>The lower interest rate probably occurred when the stafford became in repayment status. Additional discounts occur when you have ACH and making X number of regular payments. The student could be in school or more typically out of school to be in repayment status. </p>
<p>The current interest rate is determined as Sybbie's post. THX. and is determined on July 1 treasury auction, for 91 T bills, plus 1.7% for that fiscal year for Staffords. </p>
<p>DO NOT expect to get a Stafford or PLUS programs at this years rate for fall 2005. </p>
<p>For our school, you CANNOT even apply for a loan prior to 3 months of first day of classes. If your school begins Sept 1, the earliest date of loan application is June 1. You must do the FAFSA, ASAP but you cannot ask the school to approve your loan prior to June 1. Anything prior is declined automatically. </p>
<p>Consult your school for the procedure and dates.</p>
<p>Emeraldkity4
Re: PLUS, It is my understanding that you do not have to begin payment until kid is out of school. Interest however is capitalized into the loan if not in repayment. </p>
<p>We are doing the same as you in making payments while kid is in school, as a method to manage cash flow, take advantage of low rates, and manage various investments and EE.</p>
<p>We are also in process of consolidation of PLUS loans to lockin a 4%-25 year, without discounts. With discounts, the new loan's interest rate will be even less than our current PLUS including discounts. Which means the cost of school is now substantiallly lower to us.</p>
<p>Isandin: The FI cals may be based on a 10 year payment program. If you consolidate, at the end of your schooling, you can base the payment schedule on a 10, 15, 20, 25 schedule. More payment options are also available.
Glad you are asking Q's now. Staffords, PLUS programs are guaranteed loans to the lender and consequently the cheapest loans out there.</p>
<p>Be aware that interest on student loans are deductible from gross without itemization on federal taxation level.</p>
<p>The amount of interest you can deduct depends on your income and phases out completely at a certain MAGI.</p>
<p>See IRS Publication 970 pgs 25-30 for details on who can and who cannot claim education loan interest deductions.</p>
<p>If my parents take out a PLUS loan to fund my tuition, can they lock into the tuition for all 4 years? My father asked this today, because he heard about someone at work who is paying GWU tuition and was somehow locked in.</p>
<p>You'll have to contact the school you want to attend. That is school by school decision.</p>