Understand the Kind Of College Loan You Have
As a student borrower, you have different rights and responsibilities when it comes to loans and who you have purchased it from. In this section we are going to focus on the typical aspects of the Federal Loans, their tenure, limit, interest rates and also the loan fees.
Federal Loans
There are four special types of Federal Loans as of this date.
- FFEL ( discontinued from 30th June 2010)
- Stafford Loans
- Plus Loans
- Perkins Loans
- Heal ( Discontinued in 1998)
- FFEL ( discontinued from 30th June 2010)
This will be discontinued from 30th June, 2010. A legislation was passed in the month of March 2010.
All new subsidized and unsubsidized Stafford Loans made to students, PLUS loans made to parents and to graduate/professional students, and consolidation loans made to borrowers, can only be made under the William D. Ford Federal Direct Loan (Direct Loan) Program. The Federal Perkins Loan Program is not affected by the HCERA.
To Know about it in depth Read more…
- Stafford Loans
A Stafford Loan can now only be DIrect type of Federal Loan and it can either be subsidised by the Government or Unsubsidised, wherein the students pay the interest rates.
Interest Rates are as follows:
- 5.6% for loans first disbursed July 1, 2009 to July 1, 2010
- 4.5% for loans first disbursed July 1, 2010 to July 1, 2011
- 3.4% for loans first disbursed July 1, 2011 to July 1, 2012.
Stafford Loans that undergraduates can borrow is $31,000 for dependent students and $57,500 for independent students. Subsidized loans can be no more than $23,000 of this aggregate amount.
The Loan fees will be eliminated as of July 1, 2010.
- Plus Loans:
These are available to Parents and they can borrow them for their dependent children. A credit check is prerequisite for such loans unlike the previous two loans.
The fixed rate for Direct PLUS after July 1, 2006 is 7.9% while the fixed rate for FFEL PLUS is 8.5%.
- Perkins Loans
Perkins Loans are originated and serviced by participating schools and repaid to the school. These are not insured by Government.
Perkins loan interest rates are fixed, currently at 5%. There are no origination or other fees or charges for Perkins loans.
Since 2008, undergraduate students can borrow up to $5,500 for each year of undergraduate study up to a total of $27,500 for students who have completed two years of education leading to a bachelor’s degree.
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