Could someone explain the student loan program throught the government?

[Planogirl]

I'm confused about all of the different names I see. There is Direct Loans, Sallie Mae, AES, Edfinancial, something through Citi and so on. Are these related?

When you applied, who did you actually apply with? I know that Sallie Mae typically lists each term amount as a different account - do you also have to reapply each time?

I'm curious about all of this...

 

[msmayor]

All I know about is the method used for my daughter. Her school is considered a "Direct Lender" and therefore any Stafford or PLUS loans are obtained directly through the college. I actually find that a lot easier than trying to search out a lender myself.

All she had to do was complete a loan counseling tutorial at the Direct Loan servicing website, and submit the name of her school as well as the school's loan application form (one page...very short). After the approvals she completed (on-line) her Master Promissory Note which covers all loans she'll be receiving throughout.

Loan funds are disbursed two weeks after the start of the quarter at her school and as long as all her paperwork is in order we don't have to worry about 'covering' the tuition payment (which is due 6 weeks before). They automatically credit her for whatever the disbursement is.

 

[Planogirl]

All I know about is the method used for my daughter. Her school is considered a "Direct Lender" and therefore any Stafford or PLUS loans are obtained directly through the college. I actually find that a lot easier than trying to search out a lender myself.

All she had to do was complete a loan counseling tutorial at the Direct Loan servicing website, and submit the name of her school as well as the school's loan application form (one page...very short). After the approvals she completed (on-line) her Master Promissory Note which covers all loans she'll be receiving throughout.

Loan funds are disbursed two weeks after the start of the quarter at her school and as long as all her paperwork is in order we don't have to worry about 'covering' the tuition payment (which is due 6 weeks before). They automatically credit her for whatever the disbursement is.

Thanks for the response.

Did she apply during her senior year or the summer prior? I'm being told that applications should be made as early as possible which is difficult when you don't know which college is the right one yet.

 

[msmayor]

Thanks for the response.

Did she apply during her senior year or the summer prior? I'm being told that applications should be made as early as possible which is difficult when you don't know which college is the right one yet.

You really can't apply until you've been accepted to a school, filled out the FAFSA and received the financial aid package from the school she's going to attend. The reason is because while every freshman is entitled to borrow up to $5,500 in Stafford loans, up to $3,500 can be subsidized (interest paid by the gov't while in school) while the remaining $2,000 is unsubsidized (interest accrues from date of disbursement to the school and is added to the loan balance).

You need to know whether the school attending is a Direct Lender (meaning you go through the school to obtain the loan) or if you need to go out on your own to individual lenders. You won't know which until you know the school she's accepted. If you went on your own to an individual bank and then found out your daughter's school is a Direct Lender Only, all that work would be for nothing as you wouldn't be able to use the outside lender.

There really is no rush to apply for Federal student loans. The process really does go smoothly. My daughter completed her application and tutorial sometime in May of her senior year, and all approvals were in place in less than a month.