Information about FAFSA Student Loans
Whether someone is fresh out of high school or looking to go back to school to further their career, it is important to know how the Free Application for Federal Student Aid (FAFSA) will effect their finances.
The FAFSA is filled out in February every year and will tell students if they qualify for federal aid, which can come in the form of grants or loans. Grants do not need to be paid back, whereas loans do.
Before accepting any aid offered from the FAFSA, it is crucial to know information about the FAFSA student loans. The most popular form of FAFSA student loans is the direct Stafford loans. These are low interest loans that come directly from the US Department of Education.
These loans can be either subsidized or unsubsidized. A Direct Subsidized Stafford loan is based on financial need and will not accrue interest during the grace period, while the borrower is in school, or during deferments. Direct Unsubsidized Stafford loans, however, are not based on financial need and immediately accrues interest from the time the payment is disbursed.
The borrower can choose to pay the interest on an unsubsidized loan as it accrues, or they can wait until the total payment is due. Waiting, however, will cause the interest to be added to the loan amount, which will result in having to pay even more interest, so it is wise to pay off the interest when possible. It is also possible to receive both a Stafford subsidized and Stafford unsubsidized loan at the same time.
One other popular loan offered through FAFSA is the Perkins loan, but its availability depends on the borrower's campus. A Perkins loan is a need based loan here the school acts as a lender using funds given to it by the government. The Perkins loan is subsidized and once repayment begins the interest is only five percent.
Another crucial fact to know about FAFSA student loans is that they do have a grace period before they need to be repaid. This grace period includes the time that the borrower is enrolled in school at least part-time, which means payment is not due until after graduation or when a student drops out of school.
There is usually also at least a six month deferment after graduation meant to allow graduates time to get a job before repayment begins. The Perkins loan, however, has a nine month deferment. Other deferments may be available depending on situation and need.Get college information about financial aid, tuition, course schedules and your graduation timeline at Classes and Careers.
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