Department of Education School Loans Explained
Anytime you plan to take a large financial step, it should be done with the most information possible to make sure you make the best decision. This is true of student loans because, believe it or not, this is likely your first foray into the world of financing. There are several different types of loans available so you need to understand each one is decent detail. One of the main types you will come across is the Department of Education school loan program known as the Federal Family Education Loan program. The US government is one of the leading lenders to American students and handles a variety of loans. The FFEL program has a large number of loans with benefits to students of varying economic backgrounds.
About the Department of Education School Loans
Department of Education school loans under the FFEL program are low interest loans specifically designed to pay for higher education. The loans can be subsidized (those that do not accrue interest during enrollment or deferment) or unsubsidized (those that accrue interest from the date of disbursement) according to your financial status.
The subsidized loans in the Department of Education school loan program have limited funds and are issued on a first-come-first-serve basis. The unsubsidized loans are generally limitless because they earn a good deal of profit for the government. You do not have to make any payment on the loans until you have dropped below half time enrollment, graduated or terminated your stay in the program. Once you have done so, you will have a six to nine month grace period before your repayment period begins. Virtually all Department of Education school loans are eligible for loan consolidation during grace or repayment periods.
Applying and Getting Department of Education School Loans
To apply for these loans you have to submit the FAFSA which will determine the amount of federal aid you can receive in the form of gift aid, and supplement that with your student loan amount to cover the entire cost. You will be sent an award letter that details the amount of each kind of aid you will be given and lent.
The types of loans you are eligible for is mainly determined by your financial need. If your financial backing (read parents or guardians) has a low income, you will likely qualify for subsidized loans. The amount you get is based upon your need and the maximum amount offered each student in your level. If you are not eligible for subsidized loans or have exhausted subsidized resources, you will be offered unsubsidized loan programs. When you want to accept these loans you will need to sign a promissory note. Once signed, you are legally bound to repay the debt in full to the Department of Education school loan program.
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