Federal Student Loan Guide

After reading over some of my previous posts, I decided that it may be a good time to start at the beginning seeing as I never really did. I've given suggestions on how to curb average college graduate debt but in all reality some students and parents alike may be wondering what kind of loans there even are for college educations.

1. Stafford Loans

Federal Stafford Loans are loans offered by the Department Education to help subsidize your personal and families resources. They also cover above and beyond scholarships, work study, and grants. Almost all students can get Stafford Loans no matter what your credit score is or other financial problems you may have had in the past. There are both Unsubsidized and Subsidized loans, both of which, are guaranteed by the Federal Government.

Below are the Stafford Loan Limits throughout your college career.

Stafford Loan Limits

Dependent Students Annual Loan Limits
First Year $5,500 ($3,500 subsidized/$2,000 unsubsidized)
Second Year $6,500 ($4,500 subsidized/$2,000 unsubsidized)
Third Year and Beyond $7,500 ($5,500 subsidized/$2,000 unsubsidized)

Independent Students Annual Loan Limits
First Year $9,500 ($3,500 subsidized/$6,000 unsubsidized)
Second Year $10,500 ($4,500 subsidized/$6,000 unsubsidized)
Third Year and Beyond $12,500 ($5,500 subsidized/$7,000 unsubsidized)
Graduate or Professional $20,500 ($8,500 subsidized/$12,000 unsubsidized)

Lifetime Limits
Undergraduate Dependent $31,000 (Up to $23,000 may be subsidized)
Undergraduate Independent $57,500
Graduate or Professional $138,500 (Up to $65,000 may be subsidized)
or $224,000 (for Health Professionals)

2. Parent PLUS Loan

A Federal Parent PLUS Loan is a loan that parents of dependent students can apply for to help pay for the remainder of school that the financial aid package did not cover. It can cover up to the full cost of the student's tuition. Parents must pass a credit check to be approved for this loan, the only way around it is to get a friend or a relative to guarantee the loan. I would not suggest this for anyone.If someone asks you to do this, who is not your own personal child, you are setting yourself up for disaster. As of right now the interest rate for this loan is a 7.9% fixed rate. This loan is a 10-year loan and it is required that you must pay at least $50 a month and repayment begins 60 days after the full amount of the loan is dispersed.

3. Federal Perkins Loan

A Perkins Loan is a federal loan given to undergraduate and graduate students with exceptional financial needs. It has a low interest rate at 5% and unlike other loans, it has to be applied through the student's financial aid office at their school. Depending on what amount you need for school, the amount per year that an undergraduate student can obtain is $4,000, with the maximum amount allowed total per student is $27,500. For a graduate student, the maximum amount per year is $8,000 and $60,000 total which would include the undergraduate amount requested previously.

4. Graduate PLUS Loan

The Graduate PLUS Loan is almost exactly like the Parent Plus Loan except for the fact that it is for a Graduate Student to apply for. The Graduate PLUS loan is a fixed rate interest rate at 7.9%. Graduate students must apply for this based on credit scores and not on a need basis. The loan allows graduate students to apply for the loan for tuition, room and board, books, lab expenses, minus any other aid that the student is currently receiving. Payments can be deferred while you are currently enrolled in a program and the interest that is accrued is tax deductible for most graduate students.

This is just a basic overview of some student loans that you can receive or actually obtain. Depending on requests, I will write a more in depth analysis of each topic if people find it helpful. If not, I will leave it like this if everyone would like to research more on your own.

Kevin is the owner of http://collegegraduatedebt.com If you are interested in more, please come follow my blog on a quest to get future, recent, and graduated college students debt-free.

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