College education has gotten increasingly expensive. Thankfully, there are many loan programs that can help you get through your college education. While a student loan does cause debt—it can be handled relatively painlessly. The key is to know some key information. What loan program works for you?
Federal Perkins Loan
- The Federal Perkins Loan is money given by the government to universities, to help students get through college.
- Students must attend school at least part time to benefit from Federal Perkins Loan. It is given to both professional graduate and undergraduate students. Because the Federal Perkins Loan program exists to help students with financial struggles, Pell Grant students are the first priority.
- Students can receive up to $20,000 total on undergraduate degree programs, which comes in amounts of up to $4,000 each year. For graduate students, the yearly cap is $6,000. The overall, lifetime limit on these loans is $40,000—both undergraduate and graduate.
- Loan repayment must begin no later than nine months after either graduation or dropping below part-time status. For ten years the loan remains at 5% interest. If payments are prompt and on date, there are no penalties for pre-payment.
Federal PLUS
- Federal PLUS loans are borrowed directly from the government—either through dependent students’ parents or through professional and graduate students. The loans can be borrowed via the Direct Loan program—school participation or through FFEL program—private lenders. Direct PLUS loans charges 7.9% interest while the rate for FFEL is 8.5%.
- Anyone applying to Federal PLUS must have a good credit. If credit history is poor, applicants could receive loans by getting a co-signer or by proving extenuating circumstances.
- Either students or parents can borrow as much money as it takes to attend the college, excluding financial aid. Graduates should file a FAFSA (or, Free Application for Federal Student Aid) while parents whose student is still dependant are encouraged to file.
- Loan money is used to pay for boarding and tuition expenses, after which, parents with dependants receive the rest. Student loan buyers receive the remainder of their loan money. Loans must be used exclusively for education.
- Repayment starts right away. After July 1, 2008 parent loan borrowers may defer payment as long as the student is at least part time and until he leaves school. During deferment interest must be paid or it will be added onto principal.
