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Understanding Student Loans

Many previous, current, and prospective college students are unfortunately not completely aware of (or up to date) on the realities of eligibility, credibility, and expectations involved with Subsidized and Unsubsidized Stafford loans, their interest rates, and how or why Pell grants are applicable and when.

For starters, a student loan will be based off of what's called an 'EFC' or Estimated Family Contribution - which essentially, is the government's way of gauging and identifying you with a numerical value in which reflects how much financial support you're expected to receive from your family for college tuition, books, fees, and cost of living. Additionally, you are required annually to fill out what's called a FASFA - which stands for the Free Application for Federal Student Aid - hosted by the U.S. Department of Education. The FASFA is set forth to again review and gauge any income or assets you and your family have, as well as your salary history and current income - in justifying how much 'financial aid' or loans you will be eligible for in lieu of pursuing college-level education.

Ultimately, your EFC and other formulas will be used by the government, as well as documented verification, to determine whether or not you are a dependent or independent degree-seeking student - automatically being issued the status of independent after the age of 24 without paper-work. Otherwise, extensive documentation and proof will be required to prove and acquire independent status - the delineation between the two is a substantial difference in loan-sourcing and maximum loans per semester or annually.


Grants & Scholarships

Before diving right into Unsubsidized and Subsidized Stafford Loans, it's worth mentioning Pell Grants. Essentially, these are financial-need based scholarships provided by the government to undergraduate-level students-only. Keep in mind, for those serious about obtaining such grants, it's essential to apply and submit your FASFA as early as possible for the upcoming year - as these government funds are verifiably limited on an annual basis.

Stafford Subsidized and Unsubsidized Loans differentiate in a very important way. That is, as a Direct Subsidized Stafford Loan would be one in which the government covers the interest of for as long as you attend school, while Direct Unsubsidized Stafford Loans are ones in which immediately begin to collect interest from the moment you receive the funds - even while still attending college.

Typically, you will have around 6-months or less (post-studies) to select and begin paying for all of your total funds or loans accrued over the course of your studies--although the government would have you believe that they're immediately due - which just simply isn't the case 'officially', as for example if you have a 3 month gap in your studies the government will just catch on and request repayment right at the end of that three month-mark.

So for example, someone having to leave university studies temporarily (justifiably with documentation), would not be penalized or held responsible for past-due loans immediately. The U.S. Department of Education has a broad variety of different repayment plans, deferment options, and other funding or lending sources and contractual programs and career-commitments available to you in aiding to rectify your past due balance or balances.

What's the maximum I can take out per year?

This is a very good question and is very much so relative through the course and transition from undergraduate to graduate studies. While nearly every university has a Financial Aid departmental page depicting the chart, in a nutshell, the data and availability of Stafford Direct Subsidized and Unsubsidized Loans can be summarized in the following way:

(Dependent) Undergraduate Students are allotted a maximum $5,500 per year, and if Independent; $9,500 annually, with a total not to exceed 20,500 on an annual basis. This same principle applies more or less all the way into Graduate Studies, increasing approximately $1,000.00 per year for both Independent and Dependent Students.


While there are other student loan options such as third-party lenders like Sallie Mae for example, or even the government-run Student PLUS loan, credit scores rely heavily on approval for such, and often will require a cosigner - which whom ideally has an above-average or 'high' credit score.

All of these instances otherwise, of undergraduate studies, fall under a total lifetime limit of approximately $31-$51K total for all undergraduate studies.

A Graduate Student on the other hand can take out $20,500 per year, however in some exceptions (such as an M.A. in an accredited Public Health Program) more, for living costs or tuition costs and expenses. Ultimately, a Graduate Student has the ability to take out as much as $138,500.00 in their total lifetime - sounds like an opportunity for multiple degrees or a lengthy course of study, right? What a lot of schools and websites won't tell you, and can even be difficult to locate on the U.S. Department of Education website, is that in considering and pursuing Medical School, you can now take out up to $224,000.00 (versus the older maximum amount of approximately $184,000.00).

It is worth noting lastly, however, that such (medical) schools must have proper accreditation and recognition by the U.S. Department of Education, such as through Title IV of the Higher Education Act (HEA), and or The Health Resources and Services Administration (HRSA). Taking all of the aforementioned information and data into consideration, conduct additional research of your own into degree programs, how they might apply to you, and what the most practical and profitable career and studies track might be for you and your future!

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