While
it is best to use savings or "free" financial aid to pay for college,
you may need to borrow money to pay for college. Listed below
are three federal student loan programs. For more specific information,
ask your counselor to see a copy of Student
Guide to Financial Aid
from the U.S. Department of Education.
A Federal
Perkins Loan is a low-interest (5%) loan for both undergraduate
and graduate students with exceptional financial need. Federal Perkins
Loans are made through a school's financial aid office. Depending
on when you apply, your financial need, and the funding level at
the school, you can borrow up to $3,000 for each year of undergraduate
study. The total amount you can borrow as an undergraduate is $15,000.
If
you're attending school at least half time, you have nine months
after you graduate, leave school, or drop below half-time status
before you must begin repayment.
If it is determined that you have financial
need remaining after your Federal
Pell Grant eligibility, and aid from other sources are subtracted
from your cost of attendance, you can borrow a Stafford Loan to
cover all or a portion of that remaining need. The government will
pay the interest on your loan while you're in school, for the first
six months after you leave school, and when you qualify to have
your payments deferred. This type of loan is called a subsidized
loan.
If
you don't have financial need remaining, you may borrow a Stafford
Loan for the amount of your determined need or the annual
Stafford Loan borrowing limit for your grade level, whichever
is less. You will be responsible for paying all of the interest
on the loan. This type of loan is called an unsubsidized loan.
To be eligible to receive a PLUS
Loan, your parents generally will be required to pass a credit
check.
A parent cannot be turned down for having no credit history--only
for having certain problems in their credit history. Your parents
might also qualify for a loan even if they don't pass the credit
check as long as they can demonstrate that
extenuating circumstances exist. If your parents don't pass
the credit check, they might still be able to receive a loan if
someone,
such as a relative or friend who is able to pass the credit check,
agrees to endorse the loan.
An endorser promises to repay the loan if your parents fail to do
so. If
approved, your parents can borrow an amount that is equal to your
cost of attendance minus any other financial aid
you get.
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