Lender Loan - Lender Loan

Sallie Mae And Other Student Options

Federal Stafford Loans were first disbursed in July, 2006. They are fixed rate low interest loans for student attending college. The maximum that can be loaned out a year on these loans is $8,500 a year that are subsidized loans, with another $10,000 a year in unsubsidized loans. While you can have up to $138,500 in Stafford loans, only $65,500 may be subsidized.

In a subsidized Stafford Loan, the student has 10-years to repay. He begins to repay the loan six months after graduation. The Government pays all interest payments while the student is in school and for six months after. The interest rates are variable, based on 91-day Treasure bills, plus 2.3%, capped at 8.25%.

Sallie Mae was established in 1972 as a quasi-governmental organization, and was totally privatized in 1997. The reason it is able to make loans to students is that it is without risk to it. The loans are guaranteed by the Government.

According to a report on CBS's "60 Minutes" show, there are large financial penalties for students who are not able to keep up with the payments on their loans on time. It's nice to be able to go to college, but many students get saddled with large debts.

If you want to apply for a Sallie Mae Loan, the first step is to fill out a Free Application for Federal Student Aid (FAFSA). Based on your FAFSA, the Government estimates how much your family can afford to pay toward your student expenses, your Expected Family Contribution (EFC). Finally, you need to find out what other loans and grants you can receive from the school that you are going to.

Filling a FAFSA includes sending in copies of your tax returns, if you are an independent student, or your parents tax returns if you are a dependent student. You can use FAFSA to apply for Sallie Mae loans and also for Pell grant and work-study programs. The school you are going to can use the FAFSA and the EFC to put together a total financial package for you.

A Federal Pell grant for educational expenses does not have to be repaid. Pell grants for the 2002-2003 school year reached a maximum of $4,000. Of course, this is in a situation that the four-year costs of an undergraduate degree keep going up. The average price for a four-year private college degree is $120,000, and can be considerably higher. Even a four-year degree for in-state students at a state university can cost $40,000.