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FEDERAL LOANS!!! What should I know in advance?
Kewop Decam
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Okay, I'm going to gradschool at the end of August. I'm going to be taking out some federal loans so my parents don't have to pay for my schooling. I wanted to know what is it I need to know exactly before applying for one of these loans. I will be calling the financial aid office later today and asking them questions too, but I'm sure some of you have dealt with loans for school before and I'd like to know how the work and such. I didn't have loans in undergrad because I was covered by scholarships, so all of this is over my head a bit.
Kewop Decam on
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Basically when you are borrowing money in that large of amounts, the key thing to pay attention to is interest rate. Otherwise you'll just be paying interest your whole life without actually putting a dent into repaying the loan.
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Interest rate on a federal loan is tied to the Prime Interest rate, so will fluctuate. Consolidation is a good idea if you can lock in a low rate, as it will change the variable rate loan into a fixed rate loan in most cases. Consolidation is generally better done via the Federal program than with an individual lender, as that lender may sell or transfer your loan to other processors. Student loan debt, if you can lock in a low rate, is some of the best possible debt you can have, as many investment programs will earn you money at a higher percentage yield than your loans will cost you in interest. If you can find something like this after graduation, your best bet is to pay the minimum due each month on your loan, and put the extra money you would have paid toward your loan in the higher rate investment plan.
I've seen the aid process work from the student side, the lender side, and even the data transfer from school to lender side. If you have any questions after speaking with your school, let me know.
You'll probably end up getting federal loans from AES (american education services) or through Sallie Mae. Sallie Mae are a bunch of life sucking ass clowns, but they are useful until you get out of school. I just finished my masters last year and have a pretty considerable private and federal loan built up. If you end up getting private loans with Sallie Mae, well...they suck. When you consolidate those they do this thing where 3 months after you have consolidated and are all finished and start paying they send you a letter saying....oh yeah....BY THE WAY....this is a variable rate consolidation loan..... HAVE FUN fucker!! ::they start laughing as they steal your money::....But you are kinda stuck with them for the time being.
Federal loans are wonderful for all their options, and their ability to consolidate cleanly. Once you get out of school though you want to consolidate your federal loans with these guys ~>https://www.collegeloan.com/refinance/application.aspx
They give you loads of more options, plus all sorts of perks for paying off on time, and every month, and direct debit payments. I just consolidated with them and they rock. I did it by calling them directly as Id rather talk to someone then do this shit over email, and it was pretty simple, and the guy talked me through the entire thing.
so federal is the way to go, if you get stuck with private, it blows, but its still better than a credit card debt.
If it helps any, I'm in Florida.
I get Stafford loans. You don't have to repay them until you graduate, however they are interest bearing (somewhere around 5-7% right now I think, I can't remember). Also, if you get a subsidized Stafford loan, you aren't supposed to consolidate it, for some reason someone else here might know more about.
yep, all filled out.
So if I get it subsidized, I can't consolidate? Hmm, I'm gonna have to research that and see if the best route is to get an unsubsidized loan.
You're going to save so much more in 4-10 years of interest-free learning than you will by consolidating a point or two away.
just to further clarify, you can consolidate subsidized loans, but there's no reason to until its time to start repaying, subsidized means you don't pay the interest as long as you're at least a half-time student... 6 months after you stop being enrolled at least half-time repayment begins, around that time is when you should look into consolidation
I just graduated and have Stafford Subsidized loans to pay back and I wasn't sure if I could wait until the end of my grace period to consolidate or if I had to do it relatively near the date of my graduation.
Also, what's a good way of going about consolidation, if it's not hijacking the topic?
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When I consolidated my loans, i think the federal department (department of education maybe) sent me something asking if i wanted to consolidate... they told me the interest rate they were offering (its set every june, i believe... maybe july) and then there were different options to lower that rate. For example if I set up an electronic auto-withdrawl it lowered the rate 0.5 percentage points, if i made my first 6 payments on time it went down another 0.25 percentage points, i believe. I'm pretty sure my rate is 2.25% right now, which is quite low... also interest in student loans is tax deductible so my effective interest rate is around 1.75% (2.25% * 0.75 (since my income tax rate is around 25%))... its hard to complain about 1.75% interest when CDs pay quite a bit higher than that.
I'm dazed, and confused
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Actually, that's just what the finaid guy told me on the phone. I might not even get 18gs for all I know
You can get federal stafford loans that are subsidized, but not all of the loan will be. For instance, when I pull 18.5k, 10k is unsubsidized and 8.5k is subsidized. The interest rates on the loans right now are over 7%, and there is no longer the ability to consolidate while you're still in school to lock in a lower rate.
To echo Ragg, make sure you know what portion of the loan will be subsidized. You could end up with 18k in unsub loans, which would still be a good deal, just not quite as good as having some of it be subsidized.
To The Long: 1-800-557-7392 is the number for Direct Loan Consolidation with the Gov't. If you have any Direct Loans (your lender is the Gov't and not Sallie Mae or another private lender) you can consolidate with them. Generally they are the most flexible with repayment and deferment or forbearance. If all of your loans are with the same lender, you are forced to attempt consolidation with that lender before requesting consolidation with another company.
Hope this helps.
if they are offering you that much after you filled out your Fafsa, then thats pretty much all the government is going to give you. It's still pretty good though. Subsidzed and un-subsidized can all be consolidated into the same loan when you are done school, but you want to wait until then to do it.
As for the rest of the money, you are probably going to have to get a private loan from Sallie Mae or American Education Services. I wouldnt recommend Sallie Mae but they may be the only option.
as to shogun's question, the reason for the huge difference in loan ammount probably has to do with family/personal finances. My girlfriend in college basically only had a single parent contributing to college costs and she got nearly her entire school bill paid for federally.
I seem to recall that as an undergrad the maximum amount for stafford loans is 5500/year, and that's only for juniors and seniors, freshmen and sophomores get less. I have no idea about grad school though.
I applied online for the Stafford loan (on www.staffordloan.com), all I did was fill out one simple page of my info and they were like 'ok you're done, your school will get ahold of you.'
I've filled out my FAFSA and got my reward letter, will my school contact me? Was this too easy? Will I get something in the mail that I'll have to sign?
I owe money on the 15th of July so I'm naturally frazzled. Sorry for my ignorance.
Im not sure about that at this point, but my loans were certainly for alot more than 5500/year.