Department of Education Student Loans

College Funding Through Department of Education Student Loans

One of the most important aspects of beginning a new college career is figuring out how you’re going to pay for it. With costs rising, you’ll need to use every available resource to get through school, and if you have the combination of hard work and good luck to be accepted into the school of your choice, your ability to pay for it may be the deciding factor. Through the department of education, student loans and financial aid are available, and you may need to combine these resources with private loans to get into one of your top college choices.

The first step in planning for college is applying for student aid. The department of education now has an online application and an online forecaster to give you an estimate as to how much student aid you may receive, as well as an education cost calculator. This is an important step; in addition to the fact that you may receive some funding that you will not have to pay back, you may not apply for a federal student loan without first applying for student aid.

If your parents are helping pay for your education, they may want to apply for a PLUS loan. If you are paying for college yourself, or if your parents do not qualify for a PLUS loan, you may be eligible for a larger federal loan. Stafford loans for your first year in school have a maximum of $3500, but this maximum increases to $7500 if you are an independent student. Maximum loan amounts increase every year of study.

If you qualify for a subsidized loan, as long as you remain a student the government will pay the interest on your loan. This subsidy is based on need only, and if you qualify for a higher Stafford loan limit, only part will be subsidized. In your first year, only $3500 of the $7500 maximum can be subsidized.

Federal loans now offer a fixed interest rate, which is currently set at 6.8%. Loans can be taken directly from the Department of Education or from financial institutions through the FFEL program. Private loans may vary, and may offer attractive payment options. Direct loans can be paid back with different payment plans, and you can switch from one plan to another at any time, including an extended plan and an income-based plan.

You may find that federal loans do not cover the cost of your education. There are a number of private loans available from multiple lenders with differing conditions; you should find out how much money you may be able to receive through these programs when deciding how much you can spend on your education. PLUS and Stafford loans are available to graduate students, and a loan consolidation program helps students manage their debts.

Take all these resources, private loans as well as Department of Education student loans, into account when choosing a college. You may not be able to pay for your favorite school, but you should be able to get into a good one.