December 06, 2001
By: Bev Dodd
College loan: No excuse for not applying
Are you in the market for a college loan? You're in luck. College loan rates are the lowest they've been for 17 years. More than 60 percent of all financial aid comes in the form of loans. We'll discuss this more below.
Some college loans are need-based -- meaning that they're awarded when the family demonstrates financial need. Other education loans are not need-based. Instead, they're designed to help pay the family share of costs. Many families mistakenly think they don't qualify for aid and prevent themselves from receiving financial aid by failing to apply for it. In addition, there are a few sources of aid such as unsubsidized Stafford and PLUS loans that are available regardless of need. The FAFSA form is free. There is no good excuse for not applying for a college loan.
Congress revived student loans by passing the Higher Education Act, which restructures interest rates under the Federal Family Education Loan Program. While a student is in school, the college loan rate is the 91-day Treasury bill (T-bill) plus 1.7 percentage points; during repayment, it's the 91-day T-bill plus 2.3 percentage points; and no matter what, the annual percentage rate cannot exceed 8.25% at any time. How much will you need to borrow? First, calculate your approximate expenses for the year, including all fixed costs--tuition, room and board--and other indirect costs--personal expenses and transportation costs, then apply for your college loan.
Although the federal government has specified the major provisions of a college loan, such as how much you are permitted to borrow and what your interest rate will be, there are differences in how lenders treat their clients with respect to the processing of the college loan. It is wise to assess the level of service you may expect to receive from your lender before committing yourself to borrow from them--- find out how your lender plans to manage your loan portfolio for the duration of the time you are in school.
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Bev Dodd is a successful author and publisher of http://www.family-refinance-consolidation-loans.com.
Many have commented that her website offers the best recommendations, links and information on loans, mortgages and financing.