The federal government would like to see as many people as possible attend a school of their choice in order to pursue a college degree. To make that happen, they have made it feasible for qualifying individuals to secure a government-sponsored loan. One type of government loan is called a Stafford loan. Here is a guide to Stafford loans.

What Is a Stafford Loan?

A Stafford loan is issued by the federal government to students who meet certain criteria. In order to qualify, you must attend a four-year college, university, or community college, or a trade, career, or technical school. You may also be able to get the loan for a web-based school that awards online degrees. The loan comes directly from the United States Department of Education through participating schools. These loans usually don’t have to be paid back until after the student graduates from school. However, students who quit school may be required to begin paying the loan back immediately.

Applying for Stafford Loans

As is the case with many government-sponsored loans, a Stafford loan requires the student to fill out an application and then be accepted. The application is called the FAFSA (Free Application for Federal Student Aid.) The application is reviewed, and if the student is accepted, they will receive a check in the mail.

Types of Stafford Loans

There are two basic types of Stafford loans: Direct Subsidized Loans and Direct Unsubsidized Loans.

Direct Subsidized Loans

Direct Subsidized Loans require a student to present proof that they need financial assistance. The loan application (FAFSA) will be reviewed and it will be determined whether or not the student qualifies, and if they do, how much the loan will be for. With a Direct Subsidized Loan, the student is not charged any interest on the loan as long as they remain in school at least half the time. They may also be allowed grace periods and deferment periods.

Direct Unsubsidized Loans

Direct Unsubsidized Loans work a bit differently. The main difference is that a student need not provide proof of financial need in order to qualify. As with the Direct Subsidized Loan, the school will determine the amount you can receive. One major difference between a Direct Subsidized Loan and a Direct Unsubsidized Loan is that with an unsubsidized loan the interest begins accruing immediately upon receiving the money. You must pay that interest even while you’re in school, even during grace periods and deferment periods. If that is inconvenient, you can allow the interest to build, but it will be added to the principal of the loan, which means the total amount of the loan will be larger than you actually borrowed. The reason for this is that you will be charged interest on the increased principal.

How It Works

After you’ve qualified for a Stafford loan, you must fill out a Master Promissory Note (MPN) which is a legally binding document. When you sign a MPN, you agree to repay the loan, plus interest and any fees that apply to the U.S. Department of Education. The MPN spells out the details of the loan, including the terms and conditions of repayment. Usually it’s only necessary to fill out an MPN once, because it will remain in effect for the next few years. The MPN will also tell you how much money you’re eligible to borrow. The school you’re attending will stipulate how much money you will receive. Under certain conditions, it’s possible to receive a Direct Unsubsidized Loan at the same time you’re getting a Direct Subsidized Loan. Your eligibility will depend on whether or not the subsidized loan covers all your educational expenses.

How the Money Is Received

The actual payment you receive will come directly from your school. Your check will usually come in two separate payments. The school uses the money to pay for your tuition, room and board, and other educationally related expenses. The amount that is left comes to you and can be used for incidental expenses.

Repayment of Stafford Loans

In addition to the amount of the loan, you will be required to pay a loan fee, which is a percentage of the amount of the loan. When you receive the first installment of your Stafford loan, you will be contacted by a loan servicer, which is the agency you’ll be dealing with for repayment. The servicer will keep you updated on the status of your loan. Upon completion of your college education, you will have a six-month grace period before you will have to begin paying off the loan. Your loan servicer will provide you with repayment details.

Obtaining money for college loans hasn’t always been easy. The traditional method of seeking government help is one way to go, but there are other ways to get the money you need for a higher education. Many people receive help from their family in the form of money that was set aside for that specific purpose, i.e., a college fund. Frequently college students seek loans from friends, family members or total strangers on a personal basis that bypasses traditional lending institutions. This is generally referred to as peer-to-peer, or P2P lending. Following are few tips on peer-to-peer lending for students.

What Is Peer-to-Peer Lending?

Peer-to-peer lending is basically a financial transaction between individuals whereby one party borrows money from another. There is the expectation that the money will be repaid, with interest, at the terms the two parties agree upon. It is considered a sincere financial transaction by everyone involved. Peer-to-peer lending is simply another form of borrowing or lending money.

How It Works

The term peer-to-peer lending can be nothing more than an exchange of money between friends over a cup of coffee, or it can be a formal financial transaction complete with a background check and a signed contract. In the case of a student borrowing money on a P2P basis it is usually a formal loan where the student approaches a lender and asks for money to help complete their college education.

Who Is Involved In Peer-To-Peer Lending?

Although a peer-to-peer loan can be nothing more formal than borrowing money from Uncle Joe and agreeing to pay him back whenever you can, a more ‘official’ version of peer-to-peer lending would be to approach a more traditional P2P lender and go through the process of applying for and receiving a loan with agreed upon conditions. Internet websites such as www.prosper.com or www.greennote.com are available to help. Their function is to put potential borrowers in touch with people or organizations that are willing to lend deserving students the money for their education. Other organizations that specialize in some aspect of peer-to-peer loans for students are Fynanz, Lending Club, and Loanio. If you spend a little time researching these places on the Internet you may be able to come up with a lender that will allow you to borrow the money you need for your education at reasonable rates.

Why Not Get a Traditional Loan?

One of the chief reasons for a student to go the peer-to-peer route to borrow money is that they may not have a good enough credit rating for a traditional loan. Some people prefer P2P because the loans are usually for a shorter term so they can be paid off quicker. If a student can procure a peer-to-peer loan and pay it off rapidly they won’t be burdened with a huge student loan debt when they graduate from college. Starting off in the workforce without a student loan hanging over their head means being able to begin saving money immediately instead of setting aside a portion of the income each month for a student loan.

Eligibility

It doesn’t matter whether you’re attending a community college, a prestigious state school, or getting your education through one of the best online schools, a loan through peer-to-peer lending can help you achieve your goal of getting a college degree. The only requirement is that you pay the money back–in full and on time. The terms of the loan may vary–some lenders require a good credit rating in order to be eligible for a loan–but if you do a little research you should be able to find a P2P lender that will work with you. As with any loan, the better your credit rating the lower your interest rate will be. Because you’re just starting out you may be required to have a cosigner in order to be eligible for a loan. One thing to be careful of is to not be so anxious to take out a loan that you don’t read the fine print in a contract. It would be a good idea to seek the advice of a loan counselor or an accountant before signing any papers.

With the new school year quickly approaching many recent high school graduates are looking forward to entering college. Others are anticipating their return to the campus of their choice. Unfortunately, some of those people may not be able to attend due to a lack of funds. Or could they? Through a program called the Work Study Program some of those people may actually be able to begin or continue their college career as they planned. The Work Study Program is sponsored by the federal government, and is generally called the FWS, which stands for Federal Work Study. But what exactly is the FWS, and how do you become eligible for it? Following are answers to a few of the frequently asked questions about the Federal Work Study Program.

What Is the FWS?

Basically the Federal Work Study Program is a plan funded by the federal government that provides the opportunity for people to attend college who might otherwise not be able to. This is not grant money, or a scholarship, but rather it offers qualifying students the chance to work at part time jobs so they can earn money to help with their education. This program is more commonly used by students who attend campus-based schools but may also be available to students who attend accredited online colleges.

Where Are the Jobs?

The jobs associated with the FWS are generally located on the campuses of the approximately 3400 participating colleges. Some, however, are not. Instead they are located in neighboring areas, but not on school property.

How Do You Qualify?

In order to qualify for a job through the Federal Work Study Program you must meet certain criteria. Among the regulations governing your eligibility for the FWS is the ability to prove a financial need. An applicant must also maintain a stipulated grade point average, usually around the 3.0 range, which is determined by individual schools. If your grades drop below the agreed upon minimum you could end up losing the job. This is one of things that provide an incentive to study hard and keep your grades up. The applicant must also carry a minimum of 6 credit hours per semester for undergraduates and 3 credit hours per semester for grad students.

What Do the Jobs Consist Of?

The jobs associated with the FWS could be nearly anything on campus, however they must be part time jobs, which means your employer can’t ask you to work more than 39 hours per week. The employers are requested to provide you with at least 20 hours of work per week. The object is to supply you with money you might not otherwise have, to be applied to your college expenses, and still maintain good study habits. If you qualify for the Federal Work Study Program you are encouraged to find community service type work, or work closely associated with your field of study.

How Much Do You Get Paid?

The rate of payment is left up to the employer, but they must pay at least the federal minimum wage. Participating schools have a lot of leeway in deciding who gets the jobs, and which on-campus employers will take part.

How Can the Money Be Spent?

The money you earn through the Federal Work Study Program is earmarked for college expenses. It is designated for tuition and other college related costs.

How Do You Apply?

The first step is to determine whether or not your school participates in the program. If they do the next step is to fill out a form FAFSA, which stands for Free Application for Federal Student Aid. The application can be accessed by visiting the Internet website, www.fafsa.ed.gov. When you’re filling out the form specify that you’re interested in applying for the Federal Work Study Program. Your application will be looked at by the financial aid office and a determination will be made as to whether or not you qualify for the program. If you’re accepted you can talk to the financial aid office about placing you with an appropriate employer.

How Is Your Qualification Determined?

Basically there is a standard formula used to determine whether or not you qualify for a FWS job. It takes your income and assets into account, as well as the income and assets of your parents. The size of your family is considered, and whether or not any family members, other than your parents, are enrolled in schools of higher education. The purpose of this is to determine the Expected Family Contribution (EFC,) meaning how much money your family may be able to contribute to your education. A determination is made about your qualification for the program based on the difference between the EFC and the cost of tuition, plus expenses.

A college education bears a hefty price-tag, and for many the cost of a quality education quickly transforms a college dream into an expensive nightmare. Many students and their families spend a great deal of time preparing for college by saving what they can, applying for financial aid, and adopting frugal spending habits to help them scrape by. Fortunately, there is another way to save–you just may not have heard about it until now!

Upromise is an online program that helps people make and save money for college in a very unique way–by earning money back on their everyday purchases. The earnings can simply be placed in a Upromise savings account, invested in a special 529 college savings account, linked to a student loan account to pay down the balance, or mailed out in check form to pay for tuition, textbooks, or other college costs. Money can be used for both campus-based schools and online schools as well as more informal education programs. This article will explain the many ways in which you can save for college through Upromise.

Earn Cash Back on Upromise Purchases

Once you sign up for a free Upromise account, you can begin saving immediately by shopping through the site. Upromise is connected with more than 600 online stores–and purchases made via Upromise will earn you anywhere from 1 to 25% back. Before you run out to a store to buy something you need, check to see if it’s something you can get through one of Upromise’s retailers. The Upromise site offers a straightforward means of finding what you want– ou can browse for an item by category or just by clicking on your favorite store. The percentage you earn back may be small, but every little bit counts. Over time you might see some substantial savings as your purchases start to add up. The money that you earn is deposited right into your Upromise account, no questions asked– saving really couldn’t be any easier.

Eat Out at a Urpromise Restaurant

Not only is Upromise partnered with an enormous number of retailers, it’s connected to a lengthy list of restaurants as well. Eating out at any one of the 8000 Upromise restaurants scattered across the country is another way to earn money back to be used for college. Qualifying restaurants offer anywhere from 1 to 8% back on your bill–all you need to do is pay for your meal with a credit or debit card that you have registered and linked to your Upromise account. You can even earn money back when you order a take-out dinner. Check the Upromise site before going out to eat to help you decide where to go.

Do Your Grocery Shopping at a Upromise Supermarket

Because grocery shopping is something most people do on a regular basis, it’s an excellent way to earn money back if you must spend it first. Upromise is linked to an astounding 21,000 grocery stores, supermarkets, and drug stores across the country–and each one offers an average of 1 to 3% back on particular items. Register your grocery and drug store cards with Upromise and pay your grocery bill any way you like. The scanned grocery card will track your purchases so that Upromise can deposit your earnings for you.  It’s that easy.

Take Advantage of Upromise Coupons and Deals

Whether you’re shopping for back to school items, groceries, or planning a family vacation, visit the Upromise site to find valuable online coupons, grocery coupons, and special deals ahead of time. Upromise and its partners offer a wide variety of coupons and discounts only available to Upromise account holders. It’s just one more of the many ways you can save.

Link Family and Friends to Your Upromise Account

Want to make even more money faster through Upromise? Upromise allows you to invite and link family and friends directly to your account so that you can earn money back on their purchases as well. By registering their credit, debit, and grocery cards to your Upromise account, the money they earn will automatically be deposited into your college savings account.

As you can see, Upromise is an easy and effective program that will help you build up a college savings. It’s never too early to start saving–parents can open a Upromise account for young children at any time. If you have already graduated college, you can open a Upromise account to help you pay off student loans faster. If college is in your near future or not so distant past, Upromise is an excellent way to help you bulk up your college savings.

Because the Pell Grant is designed to give students that can’t afford to attend college a chance at higher education through financial aid, it’s important to realize there are a number of requirements to become eligible. The Pell Grant eligibility requirements change each year to more accurately reflect a student’s financial need for the aid, so it’s necessary to check the current thresholds before applying.

When it has been determined that you meet the Pell Grant eligibility requirements the final amount you receive will depend on your EFC (expected family contribution), cost of attendance at the school you’ve chosen and your enrollment status.

Eligibility for a Pell Grant relies greatly on the ability to show great financial need for aid. A specific equation is used to determine this. Your financial need is equal to the cost of attendance minus the expected family contribution. The cost of attendance (CoA) is a standardized amount that represents what it costs to attend your college for an academic year. The expected family contribution (EFC) is the determined amount of money your family can contribute to higher education. The higher the disparity between the CoA and the EFC, the bigger your financial need.

Once the EFC is determined, it is compared to a standard schedule to determine if you’re eligible for a Pell Grant. Each year a maximum EFC threshold is established. The current amount is set to $5,273 for both the 2010-2011 and 2011-2012 academic years. This amount is the highest your EFC can be to make you still eligible for a Pell Grant. The lower your EFC is below this number, the more likely you are to receive the highest Pell Grant possible.

There are other federal Pell Grant requirements that you must meet. You must be an undergraduate with no graduate degree or bachelor’s. There are a couple of exceptions to this rule, however. In addition, you must not be incarcerated in a state or federal penal system. Other requirements for financial aid include: having a valid social security number, a high school diploma, GED or the ability to pass an ability-to-benefit test. You must also be working toward a qualified degree and maintain satisfactory academic progress.