Your Questions About Direct Loans

Nagesh answers:

The Pell is a grant that you do not have to pay back. The amount listed on your Student Aid Report is an estimate of what you can expect the school to award you if you are a full time student for the entire academic year (usually 2 semesters). Pell grants have to be paid out in at least 2 disbursements, so normally you will receive 1/2 for the fall semester and 1/2 for the spring semester. If you are not a full time student you will receive a pro-rated amount based on your enrollment status (i.e. Half time, 3/4 time, etc).

Direct Stafford Loans are low-interest loans that you do have to pay back, but you can choose to postpone the payments until after you graduate. There are two types: subsidized and unsubsidized. With subsidized loans, there is no interest charged while you are in school (but there is interest once you graduate or leave school). With unsubsidized loans, interest is charged as soon as the loan is disbursed to the school. If you have chosen to postpone the payments while you’re in school, the interest that accumulates will be added to the principal of the loan after you graduate. Eligibility for subsidized loans is based on financial need, so not all students will qualify.

In addition to the Pell grant and Stafford loans, financial aid packages typically contain aid from other source as well, such as work-study funding, state grants and loans, or scholarships offered by the school itself. Pell eligible students are usually first in line for this additional funding, so chances are you’ll have some help from these other sources. Your federal financial aid will be the same no matter what school you choose, but other aid can vary considerably from school to school, so it pays to apply to more than one school and compare the financial aid packages that you are offered.

Nagesh answers:

Chase Bank used to offer a direct private student loan; but, due to the economic slump they may not be offering this type any more (at least not without a co-signer). Try USBank. They were offering a direct private loan, but not without high interest rates. Of course, SallieMae is one of the most popular sources for private student loans.

Also, fill out your Free Application for Student Aid form (FAFSA) if you have not done so already. This will help you to qualify for many different types of aid. Do this as soon as possible.

Check the school where you are making application; sometimes, if you take a work/study job or student or graduate assistantship, they may WAIVE a portion of your tuition costs. Also, you may even be eligible for different types of financial assistance from the school.

Nagesh answers:

A PLUS loan is a loan for your parents to take out for your education. And YES, the the Fed Government will start charging/and your parents will have to pay interest (and start making monthly payments) IMMEDIATELY upon you starting college. Their payments will continue for 10 years upon them taking out this loan. Payments are usually a little more than 10% of the amount borrowed.

So if they borrow 10,000 for your schooling, their monthly payments would be about 110 dollars a month for 10 years.

If your parents are not willing to take out this loan for you and most importantly repay it, you are out of luck.

Nagesh answers:

You can get $3500 per year in unsubsidized (don’t pay interest till you graduate) stafford loan and another amount in subsidized loans (interest accues but it is very low interest) but I forgot the amount but $3000 per year sounds about right. Both of these have to be paid back because they are loans but you don’t have to unless you drop below 6 credit hours or graduate. They give you a 6 month grace period in either case.

Summer semester, which is not considered a real semester does not count in either case.

The thing that I am wondering is why you told me $1750 for the subsidized. That is what you get per semester, not per year.

That shouldn’t be the case unless it is your plan to begin in spring. I know this because I began in spring and took out a loan for $1750

Nagesh answers:

The EFC is NOT the amount you are going to pay your school to go to college. The EFC is just a code each school uses to determine what kinds and how much in grants (and in your case) loans you will be getting.

If you choose an inexpensive school like a community college, you and your family may only need to pay 1,500 a semester in tuition in books. Where if you choose a private or out of state school your bill would be upwards of 30K a year.

Each school has different options for payment. Most will allow your financial aid (student loans) to pay for all of it… If you qualify for enough. If you don’t then yes, you would have to make arrangements with the school to fork over the difference. Almost all payment plans include the tuition to be paid completely before the semester starts or some before the semester is finished…. It just depends on the school.

A Plus Loan is a loan in your parents name that your parents are responsible for paying back. They start making payments immediately and will continue to make those payments until its paid off. Be aware… If you continue to attend this out-of-state school, your folks would have to take this amount out every year (30K times 4 years of college = 120K) to pay for your tuition because you can not borrow that much as a dependent student in your name alone. The max you can borrow is 3,500 per year.

My suggestion is for you to attend a state school for at LEAST your first year so you and your folks can get to know and understand the whole college process and make sure you are ready for college. There is nothing worse than your folks paying off 30K for college when you get there and decide you don’t like it and drop out or choose to come home.

Here is a good book about fin aid and the types of loans.