Thomas asks…
Perkins vs. Subsidized Direct Loan?
I’m going to be a college freshmen so this will be my first time with applying for student loans. Does anyone know which loan is better (Perkins vs. Subsidized Direct Loan) and why? And if I ask for a little more money for books how will I get this money? Thanks so much!
Nagesh answers:
Hello, in reading the response from Altaira, it seems she has some incorrect information. The subsidized direct loan has a lower interest rate (3.4%) for the upcoming year, vs. The Perkins Loan (5%). However, the direct loan is deferred (you don’t pay interest) until 6 months after you graduate, or become less than half time enrolled. Whereas the Perkins loan is deferred for 9 months after graduation or you become less than half time enrolled. There is a limit to each of these loans though. You probably have been awarded the maximum direct loan already, but you can call your school to see if they can increase your Perkins.
Michael asks…
Well, should I take the Direct Loan, or not?
I have to face the facts here that as an art student, my classes are expensive and I have so far spent nearly $150 this semester between materials for a sculpture class and poster board and printouts for graphics. That wouldn’t be a problem for me except, I chose not to take out the Direct Loan for this semester figuring that it would be something that I would not need for as long as I receive pay from work study and financial help from my parents to keep going to school, but so far everything that deposits into my bank account either goes toward rent, food, and if I should put it in these terms, passing a class, in other words “already spent”. In fact, my decision about a loan is the reason I have to take Sculpture and not Photography (where I would have had to buy a fully manual camera and black and white film totaling over $500). I feel like I’m at a tipping point here and I don’t know what to do, getting a second job along with work study is not an option (there’s no time).
In case you are wondering, I’m right now nearly $11000 in debt with loans, I don’t really want to increase this number but I may have no choice.
Nagesh answers:
I used to work for Direct Loans and my sister still does, it always best to avoid getting any further into debt. Getting a second job will take a lot out of you trust me!!! I got to school and work at a hospital, so I know how yo feel. If you do get the loan here are some fact that a little of students don’t know-
1. As long as you are attending at least 1/2 time what your school considers to be 1/2 time (ask your counselor) your subsidized portion of your loan with not accrue interest.
2. The interest on the unsubsidized is a little less since your in school.
3. Try to get subsidized loans, but with unsubsidized any time you can spare to send money to paying your loan do so, then call your loan holder and have them apply it to your unsubsidized portion. Every payment received goes interest first then principal.
3. You always want to check the status of your loan when you take time off school such as between semesters, DO NOT assume that the school is going to tell your loan holder that your will be attending after the summer break because they don’t.
4. Once your school reports a change in status(like summer break) if your have not used your 6 months grace period, then you will be put into it.
5. Once you go back to school call your loan holder and get a inschool deferment ASAP so when you graduate or withdraw or go below 1/2 time, you will have your full 6 months before payment is due.
So I just gave you a little info I hope it’s helpful if you have any other question feel free to ask, I used to work there up until 3 months ago. I know tons about Direct Loans…honestly getting a Direct Loan will not be that bad, because unlike other lenders Direct Loans is a very good company to have a school loan from as long as you stay up on your loan you will be ok, if there is ever a hardship all you have to do is call them and they can help you. You will be surprised how many people could save on money but they think that Direct Loans is harsh, but their not. I have Sallie Mae and they are ok as well. I liked my job just not my boss…
Linda asks…
FAFSA Direct Loan payments – Bi-weekly?
I will be graduating from grad program in couple of years, and was wondering if it’s possible to repay my direct loans on bi-weekly payments to shorten the length of payment?
any ideas?
Thanks
Nagesh answers:
The Direct Loan Servicing Center will automatically put you on a monthly payment plan, the Standard Repayment Plan which consists of a minimum of $50 per month or whatever it takes to repay the loan within 10 years (or up to 30 years if the total debt is over $30,000).
There are absolutely no pre-payment penalities on federal Stafford student loans, so you can choose to pay more than your minimum payment or more often than once per month if you wish. They will not be able to set you up on a plan in which they will give you a due date for this extra amount or extra payment, you will just have to go ahead and send it to them yourself. So long as you pay at least the minimum monthly payment by the due date, anything above and beyond that is at your own discretion.
Good for you though! You’ve made a wise decision which will save you money in interest in the long run.
Mandy asks…
College Direct Subsidized Loan?
Hi!
I’ve submitted my FAFSA and everything, and now it’s time for me to accept the loans and sign the MPN (the promisary note). I have a question though, would it be more wise to take out the loan in my name or my mother’s name. My mom has great credit, I have zero credit (but I’m working on it =D ).
What did you all do? Is it cheaper in the long run to take it out in my name? Is the interest high or lower?
Please and Thanks 🙂
Nagesh answers:
Stafford loans are in your name… ALWAYS. You can’t get a Stafford loan in you Mom’s name.
If your mom is willing, SHE can take out a parent PLUS loan in her name to pay for your education. But she would have to do this willingly and understand that this is HER loan to repay and she must start making payments on her parent PLUS loan immediately when you start school. Both Stafford loans and parent PLUS loans are put on 10 year payment plans.
The interest is lower on the Stafford loan than on the parent PLUS loan, but again, if mom is willing to pay for all your education, then let her.
Donna asks…
How are direct subsidized loans disbursed?
I got a stafford direct subsidized loan. I don’t get it til end of summer quarter. I have a student account from higher one. I heard they give checks but I don’t know? Do they put it in my student account or what?
Nagesh answers:
Federal loan funds are first sent to the college where the school’s direct charges, such as tuition and fees are deducted. If there is money left over after these charges are paid, it is refunded back to the student, usually in the form of a check or a debit card, but sometimes with a direct deposit into a student account. Not all students receive a refund because often the entire amount that you are eligible for is needed to pay for the direct charges, so there is nothing left to refund.
Each school sets its own policies about how credit balances from loans are refunded. You would need to contact the financial aid department at your college to find out how they handle it.
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