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Student Loans

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  • December 2012
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Student Loan Programs

The beginning of a college education is an eventful and exciting chapter for America’s youth. Beginning college is also when responsibilities begin to kick in as well. Students must plan ahead how they intend to finance their education during their time at college and after completing their academic careers. Almost seventy percent of college students nationwide take out loans to help finance their education. Like any other loan, student loans must be paid off in a timely manner to avoid hurting personal credit for future investments. The government has various student loan programs to assist students with not only paying for college, but also with paying off these loans after college.

The most common type of student loan is a Stafford loan. These are loans that are available in both subsidized and unsubsidized forms. For the subsidized loan, federal government pays the interest while a student is in school, during grace periods, and deferment periods. Unsubsidized loans on the other hand make the student responsible for paying interest during the mentioned periods. If the interest of the Stafford loan isn’t paid while a student was in school, the loan balance will be higher given that the interest was added to the balance of the loan. This also means that more interest will be paid for the loan and monthly payments will be higher. (Davidoff, 97) Since the Stafford loan is a federal one, they are available to all students as long as they are citizens or permanent residents that are accepted or enrolled in a school at least half time that is part of the Federal Family Education Loan Program. Also, students are eligible for a Stafford loan only after submitting a Free Application for Federal Student Aid- better known as FAFSA. Since loans involve borrowing money, there are terms and agreements that the student must agree to before they can be approved. The Master Promissory Note is a document that lists the terms and conditions and...

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