If you or your child are looking for ways to pay for college, you should look no further than the U.S. Department of Education and their loan and grant programs. There are many options available, and careful planning may make it unnecessary to obtain state or private loans.

First, Fill Out the FAFSA

After filling out the FAFSA Form and getting your Student Aid report, you will have your Estimated Family Contribution figure, which is critical to knowing how much aid is available.

Federal grants, and most of their loans, are needs based, so the difference between the cost of attendance and your Estimated Family Contribution will determine how much aid you can get.

Then, Plan Out Your Aid

The next step is to look into grants. As this aid does not have to be paid back, maximizing the amount from this source will minimize your debt (or that of your child) upon graduation. Try to get as much of this as you can.

After that, there are several loan options available, and most of them are for the student, not the parent. Those options are:

  • Subsidized Loans
  • Unsubsidized Loans (Not based on need)
  • Perkins Loans

There are some differences between subsidized and unsubsidized loans in the Stafford program, besides whether they are based on need, but suffice to say that they are the go-to loans for students, as the rates are good, and the available funds aren’t limited (as in the Perkins program).

Am I Eligible? How Much Can I Get?

To be eligible for a subsidized or unsubsidized loan, you must be enrolled at least half time at a school that participates in the program. For a subsidized loan, you must be enrolled in an undergraduate program.

There are also limits on how much you can borrow under these programs. These limits vary, depending on

  • What year you are in school
  • Whether you are a dependent or independent student
  • Whether you are a dependent whose parents are ineligible for a Parent PLUS loan

These loans are available for very competitive interest rates so you should take advantage of them. However, there is a maximum eligibility period for these loans, so you need to track that.

In addition to the interest, there is a loan fee deducted from the amount of the loan in the amount of 1.073% of the loan amount.

If it is your first loan, you will be required to complete entrance counseling, which helps to ensure that you understand your obligation to repay the loan and sign a Master Promissory Note agreeing to the terms of the loan.

More Information

If you are looking for more information about federal financial aid for college, then download my free book, Applying for Federal Financial Aid: The Definitive Guide for Students and Parents.

For more information about what happens after you graduate, get my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

You can also access the latest news on student loans, get answers to Frequently Asked Questions, and read articles in my Library. Continue to educate yourself as you go through the process of making smart decisions about college financing!

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.