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FAFSA Student Loans

November 1, 2011

FAFSA Student Loans

FAFSA Student Loans

First off, to clear the air on any possible confusion, the term “FAFSA student loan” is actually a contradiction as the two pretty much go hand in hand, as you apply for student loans through FAFSA. Applying for FAFSA student loans can be done by filling out a Free Application for Federal Student Aid, which must be done each year in order to continue to get federal student aid. By applying for FAFSA student loans, you will not only find out if your qualify for student loans, but you will also be informed if you are eligible for any other federal financial aid like grants as well as information on work study programs where students can work part time jobs and have the government reimburse 75 percent of their earnings.

FAFSA Student Loans Options

As far as the choices go when it comes to FAFSA student loans, there are 3 federally funded loan programs that can enable applicants to afford college. These loans are set up to provide assistantce in paying for all college fees minus for attending college, minus any other financial aid the student is receiving. Below are the types of loans that you can recieve by filling out a FAFSA.

Direct Stafford Loans

These FAFSA student loans are disbursed in two forms, which are through the Federal Family Education Loan Program (FFELP) where loans are given out by different leners, as well as the Federal Direct Student Loan Program (FDSLP) which loans are given by the US government directly and are also known as “Direct Loans”.

  • Direct Subsidized Student Loans – These Stafford Loans are fully based off financial need, being that you need to prove your needs in order to qualify. The amount you qualify for will determine how much money per year you will recieve to use towards tuition costs.
  • Direct Unsubsidized Student Loans – These FAFSA student loans are not based off financial need, therefore are easier to qualify for compared to subsidized Stafford Loans.

Other Stafford Loans Details

  • Stafford Loans have a fixed interest rate at 6.8 percent meaning it will stay at the rate no matter what, or non variable.
  • They have a six month grace period where students start paying back loan debt 6 months after graduation.
  • From 10 to 25 years is offered for repayment.
  • No interest on loans for up to 5 years.

Federal Perkins Loans

  • This FAFSA student loan is notorious for providing very low interest, and is based of the applicants financial need.
  • Interest is paid by the government during the time students are in school, and do not have to repay it.
  • The students financial need is determined by the personal information filled out on the FAFSA form
  • Borrowing limits are; undergraduates – 8,000 each year, postgraduates – a cumulative total of 27,500 for all schooling, postgraduates- up to 60,000 cumulative the includes postgraduate loans.
  • Interest rates start as low as 5 percent.

PLUS Loans

These FAFSA student loans are designated for parents of students, who are looking to take on the financial responsibility or their childs loan total. These loans are also in the provided directly from the US government

Parent PLUS Loans -

  • Must be applied for by a person who is the biological parent or an adoptive parent, with the possibility of a step parent in which the student must be considered their dependent.
  • Students must be enrolled in a school schedule the is at least “half time”.
  • PLUS Loans have interest that is charged as soon as the applicant takes out the loan.
  • Interest rates are at a fixed 7.9 percent.

Loan Amount Through FAFSA Student Loans

For the most part, the ammount of money students receive towards their school out of these FAFSA student loans is determined by their EFC or Expected Family Contribution, which is a section that applicants will fill out during the time the fill out the FAFSA. The EFC is determined by the sum total of the following factors:

  • A designated percentage of the amount of net income.
  • A certain percentage of the applicants net assets, which the total percentage is formed after the subtraction of the “asset prtection allowance”.