Federal Family Education Loan Program
Below is a MRR and PLR article in category Finance -> subcategory Loans.
Federal Family Education Loan Program
Overview
The Federal Family Education Loan Program offers students long-term financial assistance, enabling them to pursue their education without having to pay for expenses upfront. Repayment begins six months after completing or leaving their degree program.
Loan Types
Stafford Loans
DigiPen, participating in the Stafford Loan Program, provides two main loan types predominantly for undergraduate students:
- Subsidized Loans: The government covers the interest while the student is in school.
- Unsubsidized Loans: The student is responsible for paying the interest both during and after school.
Both loans incur a 3% origination fee charged by the U.S. Department of Education and the loan guarantor. Students must be enrolled at least half-time and can receive both loan types simultaneously.
Parent Loans
For undergraduates, the Federal Parent Loan for Undergraduate Students allows parents to borrow the full cost of education, minus any financial aid. This loan isn't based on family assets but requires a credit report. The interest rate is approximately 9%, although it may vary by school or lender.
Participating Lenders
Several lenders collaborate with DigiPen to provide Stafford and PLUS loans, including:
- Bank of America
- Citibank
- Wachovia Education Finance
Application Process
To apply, students must complete financial aid documentation and undergo loan entrance counseling, which includes a test. Successfully completing this process leads to the issuance of a promissory note once the loan is certified.
Alternative Options
Private bank loans are another financial aid avenue, though they come with higher interest rates and are dependent on credit reports. These can fully cover student needs. DigiPen cooperates with several lenders for private loans, including Bank of America, KeyBank, Wachovia Education Finance, and Student Loan Express.
You can find the original non-AI version of this article here: Federal Family Education Loan Program.
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