STUDENT LOANS » College Financing
After years of studying and working hard, your little baby is now in the process of filling out college applications. You know your child is getting into a university for sure, now the only obstacle for you is paying for your child's college education. This is the time to research the different options for funding those college expenses. One of the most popular ways to funding your child's education is through a Federal Stafford Loan.
A Federal Stafford Loan is a type of student loan offered to certain eligible students. Students must choose to matriculate in an accredited American institution. Since 1965, The Federal Stafford Loan has been a way to help finance the cost of higher education while the lender is guaranteed repayment if the student defaults on the loan.
Originally called the Federal Guaranteed Student Loan program, it was renamed. In 1988 the program was re-dubbed after U.S. Senator Robert Stafford. He was a Republican from Vermont and was commemorated for his dedication to higher education.
Students who want to apply for a Federal Stafford Loan must first complete an application form for Federal Student Aid (FAFSA). Once approved, the money is either loaned directly from the US Department of Education through the Federal Direct Student Loan Program (FDSLP, also known as Direct) or the money can come through a third party lender through the Federal Family Education Loan Program (FFELP).
While the student is a full time student (enrolled in 12 units or more), the loans does not have to be paid back. There is a six months grace period upon either graduation, reducing one's matriculation status to part time, or dropping out of college. Interest is deferred during this time period and the loans are fixed interest.
This loan program now officially called the Federal Stafford Loan, was signed into an act by Lyndon Johnson's Great Society domestic agenda in 1965. His goal then, as is still the goal now, was to strengthen the government's commitment to higher education for all who choose it.
Paying for a college education is a costly process. But for aspiring professionals and inquisitive minds, there is no better debt to aspire to have. Statistically those who complete college earn significantly more than their less educated counterparts, over 1.8 average annual salary of a person who only has a high school degree. With a college education more of a necessity for success, a Federal Consolidation Loan can come in handy down the road.
There are many programs (PLUS Loans, Stafford Loans) to help students and parents finance the overall costs of paying for a college degree. But over time the multiple loans with their plethora of payment due dates may become overwhelming and consolidating to one lump payment may help one straighten out their financial house (please note that only a single borrower can consolidate their loans, a guardian and child's debt cannot be merged to take advantage of a Federal Consolidation Loan).
As well as the Federal Government, many lenders offer consolidation loans. A Federal Consolidation Loan is part of the FFEL program, which manages all education loans such as the PLUS and Stafford programs. Like all loans, the borrower must contact the lender and properly apply for a Federal Consolidation Loan. After the application has been received, the review process begins and more information from the borrower's other lenders or from its own system is gathered. The goal to calculate the actual the amount owed on the loans. The applicant will then be notified about the consolidation loan, normal consumer disclosures, the amount owed, and where to make payments.
A consolidation loan is a great way to help organize ones finances. To take advantage of a Federal Consolidation Loan students must graduate, leave school, or drop below half-time enrollment.
PLUS loans are eligible for consolidation once they are fully disbursed.
