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Federal Stafford Loans
Federal Stafford Loans are made by the United States Department of Education to eligible students who have financial need (as determined by the FAFSA), are enrolled at least 6 credits (half-time) and are making satisfactory academic progress. Federal Stafford Loans can be subsidized or unsubsidized.
- Subsidized Federal Stafford Loan
With a need-based Federal Stafford Loan, the government pays the interest on the loan while the student is in school or on deferment. Federal Stafford loans are “subsidized” loans because the government pays the interest and therefore subsidizes or supports these loans.
- Unsubsidized Federal Stafford Loan
If a student has a non-need based Stafford Loan, they have an “unsubsidized” Federal Stafford Loan, and the student is responsible for any interest that accrues during all in-school grace and deferment periods.
The Subsidized Federal Stafford Loan currently has a fixed interest rate (in 2011/2012 it is 3.4%), while the Unsubsidized Stafford Loan fixed interest rate is 6.8%. The Subsidized Federal Stafford Loan interest rate is determined by the United States Congress. For a subsidized Federal Stafford Loan, an “origination fee of 3% may be deducted proportionately from each loan disbursement. For an unsubsidized Federal Stafford Loan, an “origination fee” of 3% may also be deducted proportionately from each loan disbursement. Documented need is determined by the FAFSA. The lender may also collect an insurance premium of up to 1% of the loan principal for both type of loan to be deducted proportionately from each disbursement.
Federal PLUS Loans
Federal PLUS loans are for parents who want to borrow to help pay for their children’s education. This provides additional funds for education expenses and, like Federal Stafford Loans, are made by the United States Department of Education.
Federal PLUS Loans enable parents with good credit histories to borrow for each child who is enrolled at least half-time and is a dependent student. For PLUS Loans first disbursed on or after July 1, 1993, the annual loan limit is the child’s cost of education minus any estimated financial aid received.
Alternative Loans
Alternative loans are monies offered by lenders to help students meet loan needs that are not otherwise met by financial aid, grants, scholarships and parents. Students can apply as creditworthy or credit-ready or with a co-borrower. Students must be at least 18 years of age and a U.S. Citizen or Permanent Resident. Students must be enrolled at least half time and have at least acceptable credit. Either the student or their co-borrower must be employed or have sufficient income to support the debt. They must also have a stable residence, employment and credit history.
New Jersey Class Loans
New Jersey CLASS Loans are non-need based loans for students or parents who want to borrow to help pay for their children’s education. CLASS Loans are made through the New Jersey Higher Education Student Assistance Authority (NJHESAA). These loans enable students or parents with good credit histories to borrow up to the student’s cost of education minus any estimated financial aid received. The interest rate and administrative fee on the NJCLASS is dependent on the payment option chosen.
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