Video

Transcript

Welcome to Knowledge for College brought to you by Chase, and thanks for joining us. This series of videos provides valuable information on the many important steps of going to college and financing an education.

Hi, I’m Chelsea Richardson. Ken Butler has details on how federal student loans can help you pay for college.

If you’ve already checked for free money – like scholarships and grants – and you still need help paying for college, you should consider federal student loans.

Federal student loans have low interest rates and are designed exclusively to help students pay for education costs. The federal government is the largest source of student loans. These loans should be your first choice if grants and scholarships don’t meet your needs.

The first step is to complete the Free Application for Federal Student Aid or FAFSA. The government will use this form to determine your eligibility for a federal loan – a loan that usually offers lower interest rates than private loans. You can pick up the form from your school or apply online at fafsa.ed.gov.

The federal government offers several loan programs: the William D. Ford Federal Direct Student Loan Program (or Direct Loans), the Federal Family Education Loan Program (FFELP) and the Federal Perkins Loan Program.

Once your FAFSA has been processed, your school will determine which loan program you can borrow from. Eligible parents and students whose schools use the Direct Loan Program borrow directly from the government through the U.S. Department of Education. Those whose schools use the Federal Family Education Loan Program borrow through private lenders who offer loans that are backed by the government.

Both the programs offer Stafford and PLUS loans.

The most commonly used student loan in these programs is the Stafford loan. If you’re an undergraduate, graduate or continuing education student who is enrolled in an eligible school at least half time, you may be able to receive a Stafford loan.

There are two types of Stafford loans: subsidized and unsubsidized. The difference is important!

Subsidized Stafford loans are for students who demonstrate financial need. The federal government will pay the interest on these loans while the student is in school and for six months after the student graduates or leaves school.

Unsubsidized Stafford loans are not based on financial need. Student borrowers must pay the interest as it accumulates during school or have it added to the loan principal when repayment begins.

PLUS loans are offered to graduate students and eligible parents of undergraduate students. Eligibility is based on creditworthiness, so you or your parents’ credit history will be reviewed. If your credit doesn’t meet the loan requirements, consider applying with a creditworthy cosigner.

The Federal Perkins Loan is available to students who are enrolled part time, half time and full time. The financial aid office at each school distributes the awards to students with the greatest financial need. Because funds are limited, submit your FAFSA early for consideration.

All of this may seem like a lot to digest, but the message is clear: submit your FAFSA and submit it early to take advantage of these federal loan programs. You can learn more about federal loans and the FAFSA at StudentAid.ed.gov or ChaseStudentLoans.com.

The Knowledge for College informational video series is brought to you by Chase to help you better understand college financing and other important topics regarding higher education. If you have any questions about your specific situation, you should consult your own financial advisor or the financial aid office of your school.

Important Information: Subsidized Federal Stafford Loans: If you demonstrate financial need, the government will pay the interest that accrues while you’re in school at least half time and during eligible grace and deferment periods.

Unsubsidized Federal Stafford Loans: You are responsible for paying all interest that accrues while you are in school and during grace, deferment and repayment periods.

This information was current as of 09/01/2008.

This is a link to a third-party site as described in our Weblinking Practices. Note that the third party's privacy policy and security practices may differ from Chase standards. Chase assumes no responsibility nor does it control, endorse or guarantee any aspect of your use of the linked site.