Direct loans, the new way to fund going to college
Jakob Jelling
Going to college can be an expensive proposition for both the student and the government. Many people are finding that going to college is an impossible dream due to raising tutitions and cost of living unless they receive help in the form of a scholarship or loan. Of course the raising costs of everything are no reason that any bright child should not receive a higher education and achieve all they can aspire to.
In the past the federal government has had a lending program to assist people with funding their secondary education costs but this system has it draw backs. The old system of student loans was fraught with fraud, was time consuming and very confusing to most people. With the old system there was more than 7.000 lenders with 65 secondary markets and 35 guaranty agencies. For one loan most students would have to fill out countless forms and apply to numerous agencies until they finally got the answer they needed.
The other big problem with the old lending system was the cost of administrating the loans. On average it cost the government $11 per $100 loaned to manage the accounts. The solution to this is the simplified Direct Loan system that is now in place. The Direct Loan system is exactly what it sounds like; the government lends the money directly to you thus eliminating the middleman and much of the cost of lending money to students.
When applying for a Direct Loan you will have two options, a subsidized or unsubsidized loan. A subsidized loan is generally for people who would not normally be able to afford going to college at all. With a subsidized loan the government pays all the interest on the loan until your schooling is finished at which point you must begin to repay the loan. An unsubsidized loan is the standard Direct Loan for most people. With an unsubsidized loan you must pay interest on the loan while you are in school and then begin to repay the loan after you graduate. You do have the option of deferring the interest payments while you are in school. If you elect for this option the amount of the interest is added to the principal of the loan each month until you graduate.
Just like all other areas of finance in your life, you must also carefully control the Direct Loan financing. There are many things to keep in mind such as the yearly lending limits. For the first year you can only borrow $2,625, $3,500 the second year and $5,500 each year after that. This means you may also have to work or find other sources of funding while in school. Keep careful records of all the money you receive and keep receipts for everything you spend the money on. You might be surprised at what all can be used as a tax deduction.
As you can see Direct Loans are a fast and efficient way to receive college funding from the government. The application process has been reduced to basically one form, the time it takes to gain approval is faster and you receive your money sooner than before. Direct Loans are a welcome overhaul of the generally failing old system of student lending.
About the author:
Jakob Jelling is the founder of http://www.cashbazar.com. Please
visit http://www.cashbazar.com/loans.shtml to learn about the
loans that suits you best.
The latest information and news on Consolidate Debt Online :
Many consumers reach a point in their lifetimes when they have too much debt, particularly credit card and other forms of unsecured debt. Fortunately, there are potential solutions for people who are overwhelmed by debt.
Financial management class offered (Altus Times)
Martha Road Baptist Church understands that the American family is under attack today in many ways. The most obvious attack is the area of personal finances. With more than 1.5 million personal bankruptcies last year and the explosion of lending companies offering debt consolidation loans, it appears that our affluent culture is not quite that affluent after all. With more and more people using ...
Consumer Watch: Bankruptcy Vs. Consolidation (WCBS-TV New York)
Tightening finances are a real problem for many families, so if you feel like your income is shrinking with ever-growing expenses, you are not alone. It's hard to find someone these days not affected by rising mortgage rates, skyrocketing credit card interest payments, and a super-sized bill at the grocery store.
Is Denmark?s Roskilde Bailout a Harbinger of Deals to Come? (New York Times)
The Danish central bank bailout of regional lender of Roskilde Bank may signal the start of consolidation among the countries financial institutions, an analyst told The Wall Street Journal.
Banks to get Rs 25,000-cr farm loan relief in Oct (Business Standard India)
The government will reimburse Rs 25,000 crore to public sector banks, regional rural banks (RRBs) and cooperative banks in October as the first tranche of payments for the Rs 66,600-crore farm debt relief scheme.
Air China's first-half profit fell while China Eastern lost money (Internatio...
The airlines warned that, with high fuel prices, the rest of the year would remain challenging for the industry.
TUI in difficult spot as it tries to sell Hapag-Lloyd shipping unit (Internat...
The German company is under shareholder pressure to sell, but with slower growth in freight rates on the horizon, it is unlikely to get a good price.
Valora Holding AG / other / Valora announces satisfactory results for first-h...
-------------------------------------------------------------------------------- Disclosure announcement transmitted by euro adhoc. The issuer is responsible for the content of this announcement.
ATW Daily News (Air Transport World)
Air China's first-half net income fell 20.7% to CNY1.24 billion ($180.8 million) on surging oil prices and softening traffic resulting from May's Sichuan earthquake and heightened security surrounding the recently completed Olympics.
euro adhoc: Valora Holding AG / other / Valora announces satisfactory results...
First half 2008 28.08.2008 - Net sales increase and operating earnings ...