Over the past several decades, private colleges and universities have increased their prices dramatically.
If you are planning to attend a private college or university, chances are you will need to take out a loan or two to help pay for you tuition, room and board and other expenses. Fortunately, by filling out a FAFSA form for federal aid, you can receive better school loans than if you would get through a bank.
Direct Subsidized Loans
One type of loan you can get approved for by filling out a FAFSA form is a Direct Subsidized Loan. Direct Subsidized Loans do not accumulate interest while you are attending school or during any grace or deferment periods when you are paying back your loans. Another advantage of the subsidized loan is that you will receive a lower interest rate by using the FAFSA form to receive the loan. (See Resources.)
Direct Unsubsidized Loans
Another loan you can receive from filling out your FAFSA form is a Direct Unsubsidized Loan. Direct Unsubsidized Loans accumulate interest as soon as you receive the loan money and while you are attending school. Though the accrued interest is a downside to using an unsubsidized loan, you will also get a lower interest rate getting an unsubsidized loan using a FAFSA form.
Direct Plus Loans
The third type of loan you can receive from filling out a FAFSA form is a Direct PLUS Loan. Direct PLUS loans are for parents to use to help their children pay for college. Using a Direct PLUS loan will take some of the financial burden off of the student, and using the FAFSA form will also lower your interest rate.
Subsidized Low-Interest Loans
If filling out a FAFSA does not qualify you for financial aid loans, then you should turn to your bank or another financial institution to help fund your college education. When searching for other loans, select a loan that is subsidized -- so you are accruing interest while your student is in school -- and that is also low-interest, to lower your overall investment. Most FAFSA-approved student loans can receive interest rates between 2 and 7 percent, so you should aim for a loan that is within that interest range or only one or two percentage points higher.
Tags: FAFSA form, FAFSA form Direct, filling FAFSA, form Direct, Direct Subsidized, Direct Unsubsidized