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Understanding Federal Aid is as Easy as 1-2-3

Despite the available information on funding, the large packets distributed by colleges, and the talks with financial aid counselors, it is still very possible to not understand the basics of federal aid. Therefore, we would like to introduce you to three major government programs.

Sure, it would be ideal to write one check that covers all college-related expenses. However, for most Americans-especially for undergraduate students who are at the beginnings of their college educations-that's not a possibility.

Stafford Loans

The Stafford Loan is disbursed in two distinct versions: subsidized and unsubsidized. Subsidized Stafford Loans are awarded to graduate students based on demonstrated financial need. For students earning their master's degrees, subsidized Stafford Loans are accommodating because the government pays the interest while students are attending school. Also, there is a six-month "grace period" afforded to students after graduation, during which they do not have to make payments. Repayment begins after this grace period. Unsubsidized Stafford Loans have significant differences. The graduate student is responsible for the interest accruing while in school, although actual repayment is deferred until after graduation. The interest accumulates and is added to the loan balance. Unsubsidized Stafford Loans are available to all students, regardless of their level of need.

Perkins Loans

The Perkins Loan is a highly affordable federal loan since it has a significantly low interest rate of 5% and low fees. However, the Perkins Loan is only available to families based on need. The loan is financed with government funds, and the student's school contributes a share. Depending on when you apply, your level of need, and your school's funding level, you can borrow up to $4,000 for each year of undergraduate study. You may borrow a maximum of $20,000 over the course of your undergraduate education.

PLUS Loans (for students and for parents!)

There's good news for parents who would like to help with the cost of college via federal aid. If a student is a dependent undergraduate enrolled at least half-time in an eligible program at an eligible school, his or her parent can borrow a parent PLUS Loan. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. In order to be eligible, parents must have an acceptable credit history. The yearly limit on a PLUS Loan is equal to your cost of attendance minus any other financial aid you receive. If your cost of attendance is $6,000, for example, and you receive $4,000 in other financial aid, your parents can borrow as much as $2,000.


Article Title : Understanding Federal Aid is as Easy as 1-2-3
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Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.

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Schools Will No Longer Receive Paper FAFSA Forms
(September 20, 2007)

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