FAFSA Loan - The Truth About FAFSA Loans: FAFSA Stafford Loans,
FAFSA PLUS Loans and FAFSA Consolidation Loans

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FINANCIAL AID PROCESS for students and parents.

“Have you already filed a FAFSA?” If not we advise them to do so and how to do so.

If they had filed the FAFSA then a student aid report would be sent to the student and to the school. The school would send out an award letter. We'd establish if they had received the award letter and if so, ask how much the college expected them to contribute as an out of pocket expense.

In most cases they would choose a combination of Stafford and PLUS education loans. Occasionally the parent would say the kid was on his/her own, or conversely, that they wanted to take the whole burden themselves and not send their child graduate out into the world with a huge education debt to pay.

PLUS Loan and STAFFORD Loan Description

The Stafford Loan would be introduced as a government guaranteed, variable simple interest student loan with a current interest of x% and a cap of 8.25%.  Education loan payments are not due until 6 months after graduation. We'd explain the difference between the unsubsidized Stafford loan and the subsidized Stafford loan and that a dependent freshman can borrow no more than $xxxx.”

We'd then say that since the Stafford Loan will not usually cover the total cost of education, the Government offers the PLUS loan.

PLUS Loan

The PLUS Parent Loan for Undergraduate Students is a simple interest, government guaranteed, parent loan with a current discounted rate as low as x.xx% (this discounted rate included the 1/4% that we'd take off for automated direct debit payments) and a cap of 9%.  Some or all of the interest may be deductible. The total cost of education can be borrowed including tuition, housing, books, supplies, and basic travel expense minus any other financial aid awarded to the student. If the total cost of education was borrowed then no Stafford Loan would be necessary.

Student Loan Fees and Guarantees

We'd tell them that as a private education loan maker under the Federal loan program we do not charge ANY fees.  The Government charges a one-time 3% fee that’s considered part of the cost of education and which comes  out of the loan proceeds, so there is no out of pocket expense to the borrower. The fee paid for 3 very important benefits:

• Interest rate cap
• The option to reduce or defer payments if financial problems occur, without affecting your credit
• in the event of the death of parent or student or total disability of the parent, the loan is forgiven.

We would then start creating the desire in the prospect to get the PLUS loan.

FAFSA PLUS and Stafford Loans (continued)

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