Question:

Federal Loans and Grants?

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What are they exactly? What is the max that I can borrow? How long do I have to pay them off? What is the interest rate?

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  1. Financial Aid, in general is like welfare. It comes from taxpayers mostly. Grants fall into that category. Grants are often referred to as "free money" because of the fact that it doesn't need to be repaid. But keep in mind that grants are NEED-BASED awards and are dependent upon your expected family contribution (EFC) i.e. the amount of money you and your family are expected to contribute to your education for the year. They will take the total cost of attendance for your school per year and subtract your expected family contribtion. The DIFFERENCE, generally is what they will award you in the form of grants and/or scholarhips and stafford loans (federal loans.)

    Federal Loans are different from private loans. Federal Loans are available to most students regardless of credit history. They are usually referred to as Stafford Loans, and are backed by the federal government. Which means, any lender you get a stafford loan from, the federal government will pay off the lender if you, the student, defaults on the loan. BUT, the government WILL get their money back by garnishing your wages, taking you to court, or even withholding your income taxes. And unfortunately, filing for bankruptcy will not erase your student loan. The subsidezed version of the Stafford Loan is locked at 6.8% but the good thing about this particular version is that the interest will be paid by the government while you remain in school. The unsubsidized version will start accruing interest the second you receive the money. Your FA office usually offers you both types if the grants, etc. are insufficient to cover your cost of attendace.

    There are annual limits. They vary depending on whether you are dependent on mommy and daddy, or independent and emancipated from them. If you are a dependent freshman, sophomore, junior, senior, the limits are : $3,500, $4,500, $5,500, $5,500, respectively. If you are an independent frsh, soph, juni, seni, the limites are : $7,500, $8,500, $10,500, $10,500, respectively. Caveat: Some community/junior colleges will cap their limits lower regardless if you are dependent or independent, otherwise it would be like giving away extra money that they know would not be needed or used on you educational expenses as financial aid is intended. Hope this helps, sorry I wrote you a book.


  2. If you are thinking about getting a loan, then you should know about the basics before you get started. If you understand the basic dos and don’ts of loans, then you will be better equipped to find the best loan for your needs. Whatever type of loan you are applying for, you should follow these basic rules to help you find the best deal. When searching for a loan, it pays to do your research. Look for as many suitable lenders as you can, so that you can find the very best deal. There are many online pages that<!--allow you to compare loan rates from a variety of lenders. As well as looking online, check out your high street banks and mortgage lenders for deals too. You may find the loan that you need here,

    http://badcreditloans.awardspace.com/

    If possible, try and avoid taking out secured loans. If the amount you need to borrow is small or you have good enough credit to borrow without collateral, then do so. Although unsecured loans have higher rates, they are less risky because your home will not be at risk if you cannot make the payments.Try and take a loan out over the shortest period-->you can afford. Taking loans out over 10 years or more can be risky, and you cannot be sure what your financial situation will be at that time.

  3. If you go to the FAFSA website you can apply for student loans. Each state has several grants you can apply for. Most people under a certain income level are usually granted a Pell Grant.

    Here is the link.

    http://www.fafsa.ed.gov/

  4. grants.  free money you don't have to pay back based on the fact that you and the family are poor.

    loans.  a loan from a bank you pay back after you graduate or drop out.

    Usually you get put on a 10 year payment plan.  The interest rate for Stafford loans is 6.8%

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