According to the Student Aid US website (studentaid.ed.gov); “…you will not have to start repaying your federal student loans until you graduate, leave school, or change your enrollment status to less than half time.” Ergo, repayment of the federal student loan does not commence until post graduation – allowing students the opportunity to focus solely on their schooling as opposed to being concerned about finances.

Depending on financial need, federal student loans can come in two main formats. The US government offers subsidized federal student loans for students from families in dire financial situations. Should the student come from a family of firm financial footing, then a non-subsidized federal student loan would be applicable.

Ultimately, the two key benefits of obtaining a government subsidized federal student loan are; any interest on the loan is covered by the government for the duration of the student’s enrollment in the education; a reduction in interest rate is applied to students obtaining a subsidized federal student loan.

Interest rates for federal student loans are tiered based on subsidization. Students on a subsidized loan should expect to pay circa 6% interest back (2010 figure) – whereas students on a non-subsidized loan can expect to be making repayments at the interest rate of 6.8%. The US government maintains that these rates are always “lower than on a private loan.”

Federal student loans are noted for being a key factor in boosting credit records of the students involved, and as nearly all students are eligible for some form of federal student loan and as the grace period post graduation is historically set at six months it is a scheme set up to offer an affordable method of financial support in order to assist all American students in some way, regardless of financial superiority or lack thereof.

Federal loans to students – an overview is a post from Banyan College

Those in support suggest that by signing up for a private student loan, the student can gain from the “the best elements of the different government loans into one.” Private student loans normally offer higher loan limits than loans of a federal nature – something that will ensure that the student is not left with what is known as a “budget gap” – the amount of money required to complete higher education after the total amount offered via federal student loan is deducted from the total amount due.

On the whole, private lenders allow a larger grace period before repayment is due than what is offered by federal student loan provision – with a minimum of six months and often a full year as the period of grace.

Detractors of private student loans suggest though that the risks and the financial costs to the student are far greater than through the provision of a federal student loan. Unsurprisingly private loans come with far higher interest rates (often more than three times as high as federal loan repayment interest rates) and also require payment of multiple fees – something not attributed to federal loans.

Unique to private student loans, both a check on the credit history of the applicant (the student) and also any applicable co-signer is required. Often the private student loan is as indeed most applicable to students from family situations deemed too well off for federal assistance, but who are not financially sufficient enough to pay for the higher education without any assistance.

Private student loans – overview is a post from Banyan College

Offering the applicable student a lower interest rate, a school-channel loan can involve a long and frustrating process for all parties concerned. Essentially there is a requirement for certification by the applicable students school before the process can begin.

It is the role of the school to sign off for the level of funds that will be borrowed by the student, and it is the school to whom the bank or credit lending organization will directly deposit the funds to prior to the release to the student.

Alternatively and indeed much more popular of late is the option to obtain a private student loan in the nature of direct-to-consumer. As the title would suggest there is zero requirement for the educational establishment to be involved nor to certify the process before funds are released to the student from the banks or credit organizations, and ultimately the funds are directly released to the student.

As a direct result of the lack of certification required, the student will be forced into repaying at a higher rate of interest than is the case for school-channel loans, however the access to these funds is far more simplified and easier for the families of the student in question.

The key risk involved with direct-to-consumer private loans is that of misuse. With no requirement for school certification, the possibility remains that the student may misuse the funds as opposed to using them for their main intent and purpose – to support the successful education experience of the student.

The market for direct-to-consumer loans is a fast growing one – and something that US legislative authorities are looking to crack down on sooner rather than later.

Types of private student loans is a post from Banyan College

This up-front loan fee is also known as an “origination fee”. the actual value of this fee depends wholly on the total amount of the loan. The borrower is given the choice whether to take the origination fee from the loan amount borrowed – and reducing the money available to support the education in the process, or to add the fee to the total end cost of the loan.

Often in order for the borrower to be able to best compare loans with one another, the APR (annual percentage rate) provides the best method of comparison as it is a rate where there is an inclusion of any of these annual fees or charges. However if the loan repayment schedules differ between loans APR becomes less valuable a tool of comparison to the borrower.

Often private loan programs are interwoven with the movements of one or more financial indexes. The better the credit rating of the student applicant and their family, the lower the overhead charge is for the loans tied into financial indexes.

The consequences of a bad credit rating for a student applicant have been known to be as much as 6% higher interest rates, 9% higher loan fees and a much reduced loan limit to those granted to students of a good credit rating.

Private student loans – fees, rates and interest is a post from Banyan College

Consolidation loans allow ex-students far longer terms to repay debts. Terms can often be between ten to thirty years of repayment – subject to the financial situation and income levels of the students in question. Whilst it may look like a fairer way of repaying student loan debt as the monthly repayments are vastly reduced, ultimately the borrower will pay back a higher total amount over the term of the loan than previously required to do so.

A fixed interest rate is therefor applied to consolidated student loans, and this is calculated as a weighted average of the sum of the interest rates of the loans that are becoming consolidated. Weighting is given based on the amounts borrowed and the rates given to these amounts for each loan that is due for consolidation, and the overall rate will be capped at 8.25% regardless.

Several features unique to student loans are no longer applicable when the debts are collected into one consolidated loan. These include the lack of a grace period (the period of time allowed post graduation prior to the commencement of loan repayments), and any relative special forgiveness circumstances that may be granted from federal student loans. As a result of these issues, consolidation of student loans is not a practice that is universally preferred.

Post economic downturn in 2008, many loan consolidation programs in the United States were suspended, including major providers such as Sallie Mae and Nelnet.

Student loan consolidation is a post from Banyan College

Merit-based scholarships are most often based solely on the abilities of the student – whether these abilities be in athletic, academic or artistic fields. The majority of merit-based scholarships for students are supplied by the intended college of study or by private organizations.

Need-based scholarships are based around the financial record of the student in question and their family at large. These are generally determined by a government agency and take into account any possible family contribution and also the overall cost of attending the educational establishment of choice.

Student-specific scholarships are somewhat more associated with ethnic minorities. A particular emphasis is placed on demographical issues such as race, gender or religion when selections are made for these scholarships.

Career-specific scholarships are much more specific to colleges and universities where a particular field of research and study is at the forefront. These awards can be more generous than other scholarships available – and in particular a lot of focus is on education and nursing students – both of which are in high demand.

Alternatively, a grant is where the federal government award financial assistance to the recipient to carry out a public purpose of support or stimulation. In the case of higher education, these grants can be used to boost student numbers in particular fields of study, or to boost independent schooling numbers.

Scholarships and grants for higher education is a post from Banyan College

There is a major regulatory board in place for athletic scholarships in America, known as the NCAA. (National Collegiate Athletic Association). One of the key precedents established by the NCAA was to ensure that college scholarships awarded for athletic ability alone would have to be re-enforced by excellent academic results.

The NCAA divides its membership into three divisions, and these educational establishments compete with one another on the sporting field with teams comprising mostly of athletic scholarship students. The NCAA also holds the power to abolish athletic scholarships to any particular educational establishment should they deem their behavior and misconduct to be unacceptable. Dubbed the “death penalty”, this abolishment of athletic scholarships can pre-empt disastrous consequences for the school in question.

Multiple arguments exist both for and against athletic scholarships in the United States. Often people feel that an athletic scholarship should be unnecessary for students with sporting abilities, and would be better served if granted to students with limited abilities in either sports or academia. The common argument is that the only purpose the athletic scholarship serves is to help retain multiple educational establishments sporting teams as opposed to helping students with education.

Supporters of athletic scholarships however suggest that academic scholarships are only available to students of middle or higher class family backgrounds, whereas athletic scholarships are the only scholarship type made readily available to those students from less privileged family backgrounds. Without the athletic sports scholarships, many feel that these students would miss out on the opportunity to participate in higher education completely.

US College athletics scholarships – overview is a post from Banyan College

This application process is deemed as the “gateway” to have an opportunity of gaining access to nine types of federal student aid programs as well as over six hundred state and institutional aid programs available. Starting on January 1st, the US Department of Education allows a period of up to eighteen months to process applications; although most aid programs are provided on a straightforward first come first serve basis. Fortunately for students who perhaps miss out one year, they can simply re-submit there previous attempted form for the following year – as long as any changes are amended prior to submission.

For the 2010-2011 year FAFSA application form, 130 questions regarding the financial background, assets, income and dependancy of the student in question and their close family were asked. Ultimately the answers to these questions provide the government with a figure called the EFC (Expected Family Contribution), which serves as a formula for this decision making process. The reason for requiring these questions to be answered is because the US government sets a minimal expectation that the parents of prospective students will contribute to their child’s education – whether they can afford to or not.

One redeeming feature of the FAFSA application form is that there are no questions asked regarding race, creed, ethnicity, sexual orientation, disability or religion – whereas often some scholarships can be seen to benefit those of ethnic minority backgrounds.

Ultimately in order to be eligible to apply through the FAFSA process, the prospective student must meet certain specifications; US Citizenship, holder of a valid social security number, have a high school diploma of some form and has not been found guilty of the sale or possession of illegal drugs whilst federal aid is received.

Free application for federal student aid – FAFSA overview is a post from Banyan College

The aim of the Federal Work Study program is to ensure that the students truly in need of additional funds to aid their educational tuition costs are those that get the work experience to help them achieve their goals. There are assurances in place that all students enrolled in the program will receive at least the federal minimum wage for the duration of their employment, and that a multitude of job opportunities will exist.

In order to apply to become involved with the Federal Work Study program, students must file for the FAFSA (Free Application for Federal Student Aid). The students who are accepted to the program can be employed in a number of places including; a federal or local agency, a private organization or by the educational institution itself.

In terms of applying for the available jobs, the prospective student should apply to their own school for a job. Campus-specific procedures are in place for each application, as well as specific deadlines for the job roles to be filled. As with most US federal student application situations – the Federal Work Study Program is maintained on a first come first serve basis, and those students who apply after deadlines have past will not get in.

Due to each educational institution being granted certain finances to deliver their own Federal Work Study programs, when the finances eventually run out for the school, the program will be closed until any future federal funds are posted.

Federal work study program for students is a post from Banyan College

A lower interest rate than made available from private loans – accompanies these Stafford loans purely because they are guaranteed by the full faith of the US Government. However strict eligibility requirements are placed on these loans, as well as borrowing limits.

The funds are allocated through the completion of the FAFSA (Free Application for Federal Student Aid) application process that all students seeking some form of financial aid through education must complete. The student in question is not required to commence repayments whilst they are enrolled as either a part time or full time student. Deferment of this repayment schedule is held for up to six months post graduation and is also known as the grace period.

These Stafford loans can take the shape of being subsidized by the US Government or being non-subsidized. The main difference being that it is the interest on repayments that is paid for by the federal government at least while the student is enrolled in education, and then the interest payments become the sole concern of the student post education.

Since july 1st 2006, all Stafford loans made available to US students are issued with a fixed interest rate. This rate of interest is currently at 6.8% with a view to being amended to match the current financial climate in July of 2012.

Stafford Loans is a post from Banyan College