Student Financial Aid Terms You Need To Be Familiar With
A Student Financial Aid Assistance Program’s mission is to support a College’s mission of putting the needs of college students at the fore front of any decision making process. In maintaining this mission, the Financial Aid Assistance and Scholarship Program personnel can assist any college student in securing the necessary funds to pursue their educational goals at any college or university. This program is committed to providing quality service, reliable consumer information and complete access to all information on a large variety of higher education financial aid assistance sources. In addition, they have committed themselves to working with all communities by providing financial aid assistance workshops, information, and consultation to college students, parents, high school counselors, as well as the general public.
I have put together the following terms to help you understand the Federal College Student Loan Programs:
Subsidized Stafford College Student Loan – This is a need based student loan on which the interest will be paid by the government while you are in school at least half time, during the grace period and during any periods of deferment.
Unsubsidized Stafford College Student Loan - You are responsible for paying the interest on an unsubsidized loan while you are in school, during the grace period, during deferment periods and during repayment. Interest can be paid either while you are in school, or it can be postponed and paid after graduation or withdrawal from school. If you do choose to postpone payment of the interest, it will be capitalized once you do enter repayment. Both the Subsidized and Unsubsidized Stafford College Student Loans will have a variable interest rate that will adjust every July 1 and cannot and will not exceed eight and a quarter percent.
Capitalizing Interest – This term is a process where a lender will add any unpaid interest on a college student loan to the principal, which will increase the outstanding balance of which interest will accrue daily.
Parent College Student Loans for Undergraduate College Students (PLUS) - A PLUS Student Loan is a low cost federal college student loan taken out in the parent’s name to cover the cost of education that is not satisfied by other financial aid, for instance Stafford College Student Loans. It will have a variable interest rate that is adjusted every July 1 and cannot exceed nine percent. Parents will become eligible based on their credit history and not income.
Entrance Counseling – First time borrowers of Stafford College Student Loans must complete an Entrance Counseling. Entrance Counseling will simply educate the borrower on their rights and responsibilities as Stafford College Student Loan borrowers. In many cases you can complete your entrance counseling online by accessing it online at your college of choices website.
Exit Counseling - Borrowers who are withdrawing, graduating or dropping to less than half time enrollment will have to complete an Exit Counseling. You can complete Exit Counseling online as well at most college’s online website.
Default - Failure to pay your college student loan back according to the terms disclosed in your promissory note will results in a default. You are in default on your college student loan if your payments are 270 days past due or if you have failed to comply
with other terms of the student loan.
