One of the great aspects of the American college system is the amount of opportunity given to citizens.
In 2012, 71 percent of students who graduated from a four-year college had student loan debt. Regardless of your opinion on tuition rates or student loans, you can’t deny federal student loans give 71 percent of students an education they otherwise couldn’t
afford.
The United States government offers several loans for needy students. Two of those loans are Perkins Loans and Stafford Loans. Students should be aware of all their options to pay for college.
You might think you will always have TOPS, but if your GPA drops, knowing your options may keep you from having a breakdown when those final grades come in.
The most common federal loan is the Stafford Loan. The Stafford Loan is given out by the US Department of Education to students who show financial need. Students’ applications and eligibility are assessed by applying to Free Application for Federal Student Aid (FAFSA). You can receive a Stafford Loan for both undergraduate and graduate school.
There are two types of Stafford Loans, subsidized and unsubsidized. The main difference between the two is how much you repay. A subsidized loan will be cheaper than an unsubsidized loan because you will pay no interest while in school. In addition, unsubsidized Stafford Loans are available to any student regardless of need.
If you qualify for a Stafford Loan, you can borrow between $5,500 and $12,500. Borrowing limits are based on year classification and whether you filed for FAFSA as a dependent of your parents or as an independent. Freshmen can borrow less than seniors, and dependents can borrow less than independents.
Graduate students can borrow up to $20,500 and medical school students can borrow up to $40,500 yearly.
With a subsidized Stafford Loan, interest will not be accrued while you are at least a half-time student. Technically, the government pays the interest for you during that time. With an unsubsidized loan, interest will accrue while you are in school.
There are several repayment plans that include the graduated repayment plan, which increase the amount you have to repay over time and income-based repayment plan that is tied to how much your income is.
In 2013, President Obama passed a law that changed how the interest rates for federal loans were determined. From now on interest is linked to federal bond interest rates — specifically the Federal 10-year Treasury note, plus a small margin.
However, this is not an economics class, so I won’t bore you with details. Just know that this year’s interest rate is 4.66 percent, so you can expect around that rate while we are in school.
Oh, you’re still reading this. You must really want to learn about loans after making it through the last paragraph. Moving on to Perkins Loans!
The Perkins Loan is for people who display extreme financial need. The federal government gives money to participating schools, and then it’s the schools job to decide who is “awarded” the loan. So, in your case, you’d
borrow from LSU.
Because LSU is a participating school, you can contact undergraduate admissions & student aid if you want to talk to an official about the Perkins Loan.
Like the Stafford Loan, the Perkins Loan does not accrue interest while you are at least a half-time student. Repayment starts nine months after your graduate or leave school. Perkins Loans have a fixed interest rate of 5 percent a year.
Undergraduates can borrow up to $5,500 a year with a lifetime maximum of $27,500. Graduate students can borrow $8,000 a year.
The Perkins Loan is the most favorable federal student loan you could receive, but there is a limited amount. I also encourage you to go to the U.S. Department of Education website and learn all you can about student loans.
Jay Perkins is a 20-year-old finance junior from St. Simons Island Georgia. You can reach him on Twitter @hjcranford.