Federal College Loans and Grants
Student Aid, Repayments - Direct Stafford, FFEL, Perkins
Federal College Loans (The federal college loan program is funded by the government via its Department of Education’s FSA program (Federal Student Aid). Eligible US citizens can receive financial assistance for either themselves or for their children through one of three means: work-study, grants and loans.
There are three types of college loan available through the FSA. The first is called a Federal Perkins Loan, followed by the FFEL Stafford Loan and the Direct Stafford Loan.
What is the difference between a federal grant and a federal loan?
The principal difference is that a grant does not need to be repaid, whereas anyone who receives financial support via a loan will eventually be required to pay the money back along with any interest that has been accrued.
How much interest will I pay on a college loan?
A Federal Perkins loan is fixed (at 5% in 2004) whereas Stafford loans have a variable interest rate. This means that the interest you pay will fluctuate with rising and falling market conditions on a yearly basis. It is set in July each year but is currently capped at 8.25 per cent so you should never be charged at a rate higher than this.
When will I have to start my repayments?
Currently federal loans offer students a six to nine month ‘grace’ period before repayments need to begin.
How do I apply?
You can either apply online at www.FAFSA.ed.gov or by phoning the FSA’s info center on 1-800-433-3243. You will have to fill out an application form known at the FAFSA (the Free Application for Federal Student Aid) . This can take a while to complete, but the FSA offer excellent assistance both online and over the phone.
How long does it take for an application to be processed?
This can take anything from a week to a month, however online forms tend to be processed more quickly than mailed applications. The FSA advises that you check the status of your application regularly, and you can do this at any point following submission of your FAFSA. To do this you’ll need a PIN which serves as a security measure against fraud and confirms that it is you accessing your application and not someone else.