| Over $50 billion in student loan funds were paid out in | | | | borrower begins to make payments 6 months after |
| 2006 under the Federal Family Education Loan | | | | graduating. |
| program. States in 1966 this program is the basis for | | | | Billions of dollars each year are loaned through the |
| student loan programs such as the Perkins loan, the | | | | PLUS loan program which enables parents and |
| Stafford loan and PLUS. This program was started by | | | | graduate students to finance the high cost of higher |
| an Act of Congress and has distributed billions upon | | | | learning. This is an invaluable tool for parents paying |
| billions of dollars to students for their education over | | | | for their child's education. Since July of 2006 it is been |
| the last 40 years. | | | | an invaluable tool for graduate students as well. |
| The government in a sense serves as a guarantor | | | | You can find a complete application for these loans |
| for loans that fall under this program giving lending | | | | online at fafsa.ed.gov/. The application you find here |
| institutions more security in extending credit to | | | | (Free Application for Student Aid - or FAFSA) is the |
| students and parents for college funds. Because of | | | | application that must be completed for all the |
| this a large number and various types of lenders are | | | | different types of student loans available under |
| willing to have a share in this loan program. | | | | FFELP. |
| There are a small percentage of situations where | | | | A total financial aid package will likely include different |
| these loans are defaulted on. In these cases a third | | | | loan programs. Once it is determined what a student |
| party will step up and make a request to the federal | | | | or his family can contribute toward his education a |
| government to recoup some of the money lost. | | | | formula of loans can be created to make up the |
| Though they may not be able to recoup every | | | | deficit. |
| penny they are usually able to recover a portion of | | | | The funds from the financial aid package are normally |
| their loss. | | | | sent directly to the college at the start of each |
| Subsidized and unsubsidized loans are the two options | | | | semester as payment of tuition. Any funds left in |
| that fall under this loan program. The difference | | | | excess after tuition and fees are paid are disbursed |
| between the two is that with an unsubsidized loan | | | | to the student or his parents. |
| the borrower is responsible for all interest accrued on | | | | The fees associated with student loans vary. They |
| the loan. If they do not begin making payments until | | | | can be as low 3% or as high as 8%. Around 4 or 5 |
| six months after graduation all interest that has | | | | percent is common. Since there is a variation it is |
| accrued to that point is added to the original loan | | | | important to do some searching so that you get the |
| amount. In the case of a subsidized loan the | | | | least expensive loan available to you. |
| government pays all interest on the loan until the | | | | |