Stafford loans form part of the FFELP (Federal Family Education Loan Plan) established via Congress in 1965 to provide financial aid to students, originally envisaged to cover those in-need, even in 1965 the definition was somewhat loose and it has been expanded over the years, today Stafford loans provide over 90% of the more than $50 billion dollars distributed every year within the numerous FFELP categories.
One of the ways the original definition of need was rapidly broadened, was to create two different kinds of Stafford loans, which are subsidized and unsubsidized.
In the first circumstance, the Federal Government pays any interest that would normally accrue from the time the loan is taken out until payments begin, normally no payments are due whilst the student remains in school on half-time or greater class loads and for a half a years grace period after leaving school, notwithstanding students may request re-payments to start earlier if his or her situation allow.
Since the interest is subsidized those loans are normally need-based, meaning that aid officials look at student and family incomes in determining whether the student qualifies, the EFC (Expected Family Contribution) number is used to evaluate income information provided on the FAFSA (Free Application for Federal Student Aid) application form, approximately two-thirds of all subsidized Stafford loans provided go to students whose parents have an Adjusted Gross Wages of under $50,000.00 per year, a further 25% are provided to those in the $50,000.00 to $100,000.00 per year bracket, however the definition of needy is indeed very flexible today, since slightly less than 10% of subsidized loans are granted to students whose combined family income is over $100,000.00 per year.
For the students who do not qualify for subsidized loans, a large proportion may be eligible for an unsubsidized Stafford loan, however remain mindful that the interest starts accumulating from the day the money is disbursed until the day it is paid off, even in the situation of a modest $4,000.00 loan at 6.8% the first years interest is approximately $230.00, that $230.00 is then added to the $4,000.00 and interest charges are calculated on the higher total, this example is very oversimplified, since interest amounts are calculated monthly not annually, the exponential equation underlying it is some what complex, however sample scenarios can be viewed using a loan calculator such as one of the popular calculators available on-line.
However since $4,000.00 is a very small amount as student loans go these days, the numbers can actually be much higher given the run-of-the-mill undergraduate student and/or parent borrows about $15,000.00 per year in a mixture of subsidized and unsubsidized Stafford loans and other sources, you can acquire a detailed breakdown of what can be borrowed and by whom from a range of websites, but remember that fees do apply to any loan, therefore students will genuinely obtain a reduced amount from the stated loan amounts, it's important to keep this information in mind when considering any student loan consolidation information.
A scholarship as distinguished from a student loan is money given that doesn't need to be repaid, there are scholarships for athletes, academic high-achievers, children of local widows and Pacific Islanders, in short there is a type of scholarship to suit any potential situation.
The problem is finding them, a large proportion of scholarships are academic oriented, they involve excellent grades, but that is often just the first criteria, in order to win out over those students with the same GPA's or SAT scores, the student often has to have other elements in their background, at times that is an award from Westinghouse or other science-based competition, however it could possibly be having a history of community service the options are numerous.
One of the easiest ways to get started is to speak with a school counselor to find what is available, notwithstanding take what they say with some skepticism as they are often overworked and not aware of the latest information, continue your research by doing many web searches and dig into the thousands of potential scholarship schemes available, there are a large number of quality websites with lists of scholarship programs, amounts and a brief blurb on application requirements or criteria, in a few instances the initial criteria is as minimal as having or expecting soon a high school diploma and being a U.S. citizen, others may need your acceptance at a university and a specific residence.
There are also scholarships for the children of veterans and for those who intend to major in Health Sciences as well as for those who are residents of Virginia, just to list three, the majority but not all require you to have good grades, many may require the student to be from a low-income family, nevertheless others look to ethnicity, in other words there is a scholarship to cover the whole spectrum of possibilities.
A few scholarships require evidence of more than just an outstanding grade point average or very good test scores, or information about personal background, a good number may require that the prospective winner provide an essay, some as small as 250 words and others as long as 5,000 words, the essay could be oriented towards listing personal achievements or merit, or the grantors might like to know the prospect's views on the world, here again they run the gamut of options.
The majority scholarships are free, in the sense that the funds never need to be re-paid, nonetheless it is not always the situation that the recipient receives or gets to keep the official total amount, a good number are taxable and according to the IRS, the following criteria applies to scholarships with respect to taxability, qualified scholarships and fellowships are treated as tax-free amounts if all of the following requirements are met, 1 - You're a candidate for a degree at an educational institution, 2 - Amounts you gain as a scholarship or fellowship are used for tuition and fees needed for enrollment or attendance at the educational institution, or for text books, supplies and equipment needed for courses of instruction, 3 - The amounts received aren't a payment for your services, you should also visit the IRS website for current information.
The only way to discover what is out there, and if you qualify or have a chance to receive a scholarship, is to look into the different schemes and start applying, it is a great deal of work, however it just proves once more time that there is no such thing as a free meal, it is essential to keep this information mindful when considering any student loan consolidation information.
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