Government School Loan Comparison
If you are thinking about taking out a government school loan, you should take the time to scrutinize your options. Get a good idea of the similarities and differences among the group of loans offered by the government and choose the loan programs that are best for your situation.
A basic comparison will include such factors as eligibility, amount offered, interest rate and repayment period. You may find that one government school loan has a higher interest rate or lower award amount than another and use that difference to choose a particular program. Having all the information available is the first step in choosing the right government school loan.
Comparing Government School Loan
Perkins Loan Program – you have to be enrolled in an undergraduate or graduate program at least half time to qualify. The interest rate is 5% with an undergraduate award maximum of $4,000 per year and graduate award maximum of $6,000 per year (according to 2005 awards). The lender for this government school loan program is the school and that is who you will repay for up to 10 years depending on how much you borrow. The loan is deferred until you complete the degree program, drop below half time status or drop out. You also can defer the loan during any time of subsequent enrollment or during times of financial hardship.
Stafford Loan Program – you have to be enrolled in an undergraduate or graduate program at least half time to qualify. This program usually has the absolute lowest interest rate available on any student loans even though the rate changes each year. You can have this loan subsidized if you have demonstrated financial need.
Your award depends on a number of factors including grade level and dependency status. A private institution will be the lender and you will repay the loan to whoever the holder may be (which can change over the course of the repayment period). The repayment period is 10 – 30 years depending on balance and repayment program. The loan is deferred until you complete the degree program, drop below half time status or drop out. You also can defer the loan during any time of subsequent enrollment or during times of financial hardship.
PLUS Loan Program – you have to be the parent of a dependent undergraduate or graduate student to qualify for this loan. The amount of the loan is dependent upon the amount of aid the student already has and will serve as a supplement to the other government school loan programs. The interest rate changes annually but tend to be quite low. There is no subsidization available for this program and the repayment period begins immediately. The loans are repaid to a private institution through the loan holder.
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