Once the Department of Education completes the
evaluation of the applicant’s FAFSA, and determines the Financial Need amount
available to an applicant, a Student Aid Report, or SAR, is issued to the
applicant. The SAR contains the
EFC. There are options for
requesting a review of the Financial Need
determination.
Once the applicant has qualified for a student loan, the student and his/her family must decide on what type of loan is best for their situation. Loans are differentiated by amounts, whether interest payments are subsidized or not, and the funding source of the loan. Loan amounts must also be evaluated in terms of what other financial assistance is available to the applicant.
Direct Loans are student loans made directly by The Department of Education (“DOE”) to students and the parents of students. No banks or financial institutions are involved. There are four types of direct loans offered by DOE:
Subsidized Stafford loans eliminate interest payments while the student is enrolled in school and during the six-month grace period following graduation before re-payment of the loan begins. These are available only to Independent Students.
Unsubsidized Stafford loans charge interest on the loan principle from the day the loan is issued. Repayment of the loan doesn’t start until six months after the student has either graduated or left college. But like a credit card balance left unpaid, the interest adds up each and every day the student attends school.