Federal Direct Student Loans, also known as Direct Loans or FDLP loans, are funded from public capital originating with the U.S. Treasury. FDLP loans are distributed through a channel that begins with the U.S. Treasury Department and from there passes through the U.S. Department of Education, then to the college or university and then to the student.
According to the U.S. Department of Education, more than 6,000 colleges, universities, and technical schools participate in FFELP, which represents about 80% of all schools. FFELP lending represents 75% of all federal student loan volume.
Showing posts with label Student. Show all posts
Showing posts with label Student. Show all posts
Sunday, July 3, 2011
Student loans in the United States
While included in the term "financial aid," higher education loans differ from scholarships and grants in that they must be paid back. They come in several varieties in the United States:
Federal student loans made to students directly: No payments while enrolled in at least half time status. If a student drops below half time status, the account will go into its 6 month grace period. If the student re-enrolls in at least half time status, the loans will be deferred, but when they drop below half time again they will no longer have their grace period. Amounts are quite limited as well. There are many deferments and a number of forbearances one can get in the Direct Loan program.[1] For those who are disabled, there is also the possibility of 100% loan discharge if you meet the requirements.[2] Due to changes made by the Higher Education Opportunity Act of 2008, it will become much easier to get one of these discharges as of July 1, 2010.[3] There are loan forgiveness provisions for teachers and health professionals serving low-income areas. Currently, certain loan forgiveness or discharges are considered income by the Internal Revenue Service due to 26 U.S.C. 108(f).[4]
Federal student loans made to parents: Much higher limit, but payments start immediately
Private student loans made to students or parents: Higher limits and no payments until after graduation, although interest will start to accrue immediately. Private loans may be used for any education related expenses such as tuition, room and board, books, computers, and past due balances. Private loans can also be used to supplement federal student loans, when federal loans, grants and other forms of financial aid are not sufficient to cover the full cost of higher education.
Federal student loans made to students directly: No payments while enrolled in at least half time status. If a student drops below half time status, the account will go into its 6 month grace period. If the student re-enrolls in at least half time status, the loans will be deferred, but when they drop below half time again they will no longer have their grace period. Amounts are quite limited as well. There are many deferments and a number of forbearances one can get in the Direct Loan program.[1] For those who are disabled, there is also the possibility of 100% loan discharge if you meet the requirements.[2] Due to changes made by the Higher Education Opportunity Act of 2008, it will become much easier to get one of these discharges as of July 1, 2010.[3] There are loan forgiveness provisions for teachers and health professionals serving low-income areas. Currently, certain loan forgiveness or discharges are considered income by the Internal Revenue Service due to 26 U.S.C. 108(f).[4]
Federal student loans made to parents: Much higher limit, but payments start immediately
Private student loans made to students or parents: Higher limits and no payments until after graduation, although interest will start to accrue immediately. Private loans may be used for any education related expenses such as tuition, room and board, books, computers, and past due balances. Private loans can also be used to supplement federal student loans, when federal loans, grants and other forms of financial aid are not sufficient to cover the full cost of higher education.
Student Loan Consolidation: Why Consolidate
Student Loan Consolidation offers students the flexibility of one lower payment each month. Your student loans will be refinanced and combined into one new loan. Even if you can make the monthly payments from your original school loans, you may still want to consider consolidating to lower your payments and free up money for bills with higher interest rates. These include credit cards and personal loans, neither of which have tax-deductible interest.
Both federal student loan consolidation and private student loan consolidation offer the benefit of a significantly lower monthly payment and simplified finances. If you want to consolidate student loans, begin with your federal Stafford, Parent PLUS, Perkins, and all Federal FFELP and Federal Direct Loans that were taken out for your education. Private student loan consolidation is a separate program that allows you to refinance all non-federal, education related debt. Check out the links below for additional information on how to consolidate student loans, specifically federal loans, private loans, and frequently asked questions.
Both federal student loan consolidation and private student loan consolidation offer the benefit of a significantly lower monthly payment and simplified finances. If you want to consolidate student loans, begin with your federal Stafford, Parent PLUS, Perkins, and all Federal FFELP and Federal Direct Loans that were taken out for your education. Private student loan consolidation is a separate program that allows you to refinance all non-federal, education related debt. Check out the links below for additional information on how to consolidate student loans, specifically federal loans, private loans, and frequently asked questions.
Student Loan Consolidation
Student loan consolidation is a practical repayment tool that combines your student loans into one master loan, significantly reducing your monthly payment (up to 50% in some cases!). Take a look at how much you can save each month with our student loan consolidation calculator.
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