FFELP – The Federal Student Loan Every Student Should Know About
If you are looking for a loan to sponsor your college studies, the first options you should consider are the federal student loans. This is because the federal loans are designed to give students best value for money and ensure that are easy to repay. There are many federal loan schemes out there among which he FFELP is one of the best.
FFELP stands for Federal Family Education Loan Plan and it includes a number of other leading federal loan programs such as the Perkins loans, the PLUS loans and the Stafford Loans. The funds for these federal student loans come from a huge network of formal financial institutions that are an integral part of this program. The involvement of the Government acts as a collateral for the financial institutions, which is turn offer their best terms to the borrowers. In this way, both the lender and borrower enjoy maximum benefits.
Of all the loan offers under the FFELP, the Stafford loans are the most popular. These loans are of two types: (1) the subsidized Stafford loans where the Government pays the interest while the student needs to repay only the capital, and (2) un-subsidized loans, which required the student to pay the interest. In both cases, there is a six-month grace period from the date of graduation for the repayment of the federal student loans.
The PLUS (Parent Loan for Undergraduate Students) loan is another very well received scheme under the FFELP umbrella. Initially, these loans were the responsibility of the parents to repay. However, since 2006 July, students can repay federal student loans instead of their parents. This is a god development as it encourages the student to take financial responsibility for their college expenses.
The FFELP provides an excellent way out for students who have insufficient funds to pursue their higher studies. Contrary to popular belief, these loans are no more difficult to obtain than those requisitioned from banks. The key to success while applying for federal student loans is to apply to as many as you can and well in advance. Many of these loans require an incubation time of about 2-3 months. Another very important aspect is the documentation. Always attach all the documents that are required with your application as failure to do so would disqualify you.
There is a fee of about 3-4 per cent of the loan that usually is charged when the loan comes through. Other expenses would be 1 per cent for insurance and about 2-3 per cent origination fee. Keep this information in mind when you apply for your federal student loans.