27 Şubat 2008 Çarşamba

Uncle Sam can pay your way through college

Part of almost everyone’s college journey includes some form of financial aid. Financial aid can include government grants, federal student loans, private student loans and scholarships. Typically you can apply for scholarships with whatever school you plan to attend, but if you need help covering the excess, there are other steps that can be taken. One of the first steps for students would be to fill out a FAFSA (free application for federal student aid). Filling out a FAFSA allows you to see how much additional financial aid you qualify for. This universal document will allow you to send your information out to several colleges of your choice electronically. It will notify colleges of what funds you are eligible for. You can only receive funds at one school per academic year.

There are two sources for student loans – the federal government and private lenders. In most instances the FAFSA is required for all federal financial aid including federal student loans.

For those students entering college straight from high school, the FAFSA will need information from your parents’ financial background to assign what percentage of your educational expenses they should be able to cover. In instances of low income, government grants can come into play for funding your education. Grants do not have to be paid back at all. What grants and parents aren’t able to cover can usually be paid for by student loans and scholarships. Loans should be the last resort when funding a college education since they have to be paid back once you either graduate, or stop attending school below a part time basis.

The Federal Stafford loan and the federal PLUS loan are the two basic loans available to students seeking an undergraduate education. The Federal Stafford loan is made in the name of the student, is based on need (only the subsidized portion), does not require a credit check (it's guaranteed by a private guarantor and backed by the government rather than credit/income/assets, etc.) and does not have to be repaid until after the student graduates, leaves school or stops attending on at least a half-time basis. Federal PLUS loans are made in the name of a parent. While they do require a credit check, the credit criteria to obtain a PLUS loan are not as stringent as they are for other types of consumer loans. Repayment of a PLUS loan begins after the loan is fully disbursed.

Typically through the FAFSA site, you can pick a lender, sign a promissory note and find out when your funds will be available to your school. Any leftover money once your tuition is paid can be used to purchase books, pay room and board, or purchase school supplies. Many students choose to send back any remaining funds to cut down on the amount of money they will have to pay back in the future. Other students use the excess money for living expenses. One important tip on student loans is to only borrow what you need.

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