Student Loan FAQs

How are Grants Different from Loans?

Grants differ from loans because they do not need to be repaid. Student grants are available from various sources depending on what college course you want to follow. For instance, if you wish to follow a career in public service, you may be eligible to a Harry S. Truman grant, which does not have to be repaid.

What Kind of Financial Assistance Can I Expect from the Federal Government?

The Federal Government offers several types of loans depending on the circumstances. Not all the funds are lent directly by the Federal Government, although the government does guarantee the loans to the lender. Federal Perkins loans are available for any student, whether they study full or part-time. They are made directly by the school you attend. Stafford loans come in two types: The FFEL Stafford loan is given by a financial institution that participates in the scheme – a Direct Stafford Loan is made directly by the Federal Government. PLUS loans are similar to the above, except they are made to the parents of students.There are also various foundations which offer either scholarships or grants. The terms and conditions of these vary, but might involve working in a particular field or geographical location after graduation.

What Kind of Financial Assistance Can I Expect from Local Government Grants?

Most states will have some form of student grant and/or loan scheme in operation. The terms and conditions of these will vary from scheme to scheme, so you should check with your chosen school/s to see what sort of aid might be available to you.

Do I Need a Co-Signer for a Commercial Loan?

If you do not have a good checkable credit history, you may well be required to have a co-signer for a commercial loan. The co-signer will be responsible for repaying the loan if you default on it.

What Kind of Pitfalls do I have to be Aware of in a Commercial Loan?

Some of the pitfalls involved in a commercial loan usually arise if you are either unwilling or unable to pay your loan back. The lender can list your name with credit bureau, so if you default (don’t pay your loan back) you might find it difficult to get credit in future. Also, since 1984, loan guarantors have been able to list the names of loan defaulters with the federal Internal Revenue Service (IRS) for intercepting a scheduled federal income tax return for payment of the student loan debt.

What is EFC? How is it Calculated?

Most financial aid is awarded based on your financial need - that is, the difference between what it will cost you to attend a particular college or school, known as your student budget, and what you and your family are expected to pay toward those costs, known as your Expected Family Contribution, or EFC. To qualify, you first must have your financial aid eligibility determined. Once you determine your college costs and budget, and your family's expected contribution have been established, the school can determine your eligibility for financial aid.For dependent students, these things are considered when calculating your expected family contribution or EFC:

• your income and your parents' income
• family assets including savings, stocks and bonds, real estate investments, farm or business ownership, and trusts (equity in a family's primary residence or family farm and retirement funds are excluded)
• your income and your parents' income
• age of oldest parent and need for retirement income
• number of children and other dependents in the family household
• number of family members in college
• unusual or extenuating circumstances

How is your EFC used?

You’re not the only one who receives your EFC information. The same information is also sent to the schools you listed on the FAFSA. The financial aid office will use your EFC to determine your financial need.