College Loans for Dental School

College loans are offered to students to assist in paying for dental school, or any other college education. These loans usually carry a lower interest rate than other loan types and are usually issued by federal and state governments. They are used to supplement school grants and most forms of scholarships. It is suggested that you start with a Federal student loan to get the best interest rates. If you need further funding, private student loan programs are also available. And once you've graduated, consolidate your loans to make monthly payments easy and save money.

College loans may be subsidized or unsubsidized, depending upon the student's financial need as determined by the FAFSA. Subsidized and unsubsidized loans are guaranteed by the U.S. Department of Education either directly or through guarantee agencies. Subsidized federal student loans are offered to students with a demonstrated financial need that can vary from school to school. On a subsidized loan, the federal government makes interest payments while the student is in college. For example, if a student borrows $10,000 during college, they will owe $10,000 upon graduation.

Unsubsidized federal student loans, while guaranteed by the U.S. Government, do not have the interest paying advantage offered like that of a subsidized loan. With an unsubsidized loan, the interest is not paid by the government, but accrues during college. If a student borrows $10,000 during college, they will owe $10,000 plus any accrued interest upon graduation. For example, if you borrow $10,000 and had $2,500 accrue in interest, at the time of graduation, you will owe $12,500. In order to avoid having interest accrue while you attend school, you can choose to pay it while you attend college.

Nearly all students are eligible for subsidized or unsubsidized loans regardless of credit scores or other financial issues. Both types of loans offer a 6 month grace period either after graduation or after the borrower�s enrollment status becomes less than half-time. Both also offer a fairly modest annual limit for all college levels, including students enrolled in teacher certification or preparatory coursework for graduate programs.

In the United States, unsubsidized and subsidized college loans exist in the form of federal student loans and private student loans that can be issued directly to either the student or his/her parents.

FEDERAL STUDENT LOANS include:

Federal Direct Student Loans
Federal Family Education Loans
Plus Loans
Perkins Loans
Stafford Loans

Federal Direct Student Loans

Federal Direct Student Loans, also known as Direct Loans or FDLP loans, are funded from public capital originating with the U.S. Treasury. FDLP loans are distributed through a channel that begins with the U.S. Treasury Department. From there passes through the U.S. Department of Education, then to the college or university and then to the student. Federal Direct Student Loans can be made directly to either the student or the parents. If the loans are made directly to the student, the loan does not have to be paid back until such time that the student graduates or their enrollment status drops below half time status. This is considered a subsidized loan. When the student graduates or their enrollment status changes, the college loan will go into a grace period of 6 months. Thereafter, the student is responsibility to begin repaying of the entire loan.

Federal Family Education Loans

Federal Family Education Loan Program loans, also known as FFEL loans or FFELP loans, are funded with private capital provided by banking institutions, (i.e., banks, savings and loans, and credit unions). Because FFELP loans use private capital as their source, students who use FFELP loans are able to take advantage of payment options similar to those individuals who take out a home or consumer loan. For example, some institutions will allow a discount for automatic payments or a series of on-time payments. In 2005, approximately two-thirds of all federally subsidized student loans were FFELP. According to the U.S. Department of Education, more than 6,000 colleges, universities, and technical schools participate in FFELP. This represents about 80% of all colleges and universities in the US. FFELP lending represents 75% of all federal student loan volume.

Parent Loan for Undergraduate Students (PLUS)

If the college loan is made to the parents of the enrolled student, repayments will have to begin sooner than if the college loan was made directly to the student. This is considered an unsubsidized loan. An example of this type of loan is a "Parent Loan for Undergraduate Students" (PLUS) college loan. While PLUS loans offer a higher loan allowance, usually enough to cover any gap in the cost of education, there is no grace period and repaying is expected to begin immediately.

It is important to note that with a PLUS loan, the parents are responsible for repayment, not the student. A PLUS college loan is not considered a "co-signer" type loan with the student having equal accountability. Failure to repay or late payments can affect a person�s credit rating. In addition, parents are advised to consider the senior year of PLUS loan payments, as opposed to the freshman year. It is must easier to manage a $200 a month freshman year debt, than a $800 a month senior year debt which is based upon four years of a PLUS loan funding.

This combination of immediate repayment and the ability to borrow substantial sums with a PLUS college loan can be expensive. There has been recent legislation, which allows for graduate students to receive PLUS loans in their own names. These Graduate PLUS loans have the same interest rates and terms of Parent PLUS loans.

Federal Perkins Loans

Federal Perkins Loans are low-interest (5%) loans for both undergraduate and graduate students with financial need. Your school determines this need, and they will also be the official lender of the loan. The loan is made with government funds, and your school contributes a share. You are obligated to repay this loan to your school.

Federal Stafford Loans (Subsidized and Unsubsidized)

The basic requirements for a Federal Stafford Loan are as follows:

You must have submitted an FAFSA application
Your school has to determine that you have a financial need
You must be a U.S. citizen, permanent resident, or eligible non-citizen
You must be enrolled in school at least half-time
You must not be in default on any educational loan or owe a refund on an educational grant

Subsidized Student Loans
Subsidized student loans can be used to cover a portion of your education. The primary benefit of a subsidized loan is that the U.S. Department of Education pays the interest that accrues on the loan while:
you are in school;
during the six month grace period after graduation or you leave school before completing the program;
during any deferment period. If the borrower, while repaying the loan, needs to apply for a deferment, such as an unemployment deferment or because of a return to school, the government would pay the interest during those periods, as well.
There are many reasons a student might qualify for a subsidized student loan. The primary reason is that the household financial means are far less than what is required to cover educational expenses. It is important to note that the FAFSA must be completed before you can receive any federal loans. The federal government uses a universal formula to calculate a family's financial ability to assist in paying for their child's education. A student cannot receive a subsidized student loan simply because their parents refused to pay for their college education. Go here to apply for a subsidized student loan.

Unsubsidized Student Loans
Unsubsidized Stafford Loans are different from subsidized Stafford Loans in that the student is responsible for all interest that accrues on the loan from the time it is disbursed. Similar to subsidized loans, students will need to be certified as eligible for an unsubsidized loan, but, an unsubsidized loan offers a higher borrowing limit.

The interest that is accrued on an unsubsidized Stafford Loan can be paid at any time by the borrower while in school, during a period of loan deferment or forbearance in order to help lower the students interest capitalization and monthly payments. Capitalization occurs when a borrower chooses to allow the interest to accrue and opts to have the interest added to the principal amount of the loan. If you choose not to pay the interest as it accrues and allow it to be capitalized, you will not have to make loan payments while in school, but, you will have a larger loan amount to pay after graduating. You can compare subsidized and unsubsidized Stafford Loans here.

The Stafford Loan Process

File a FAFSA
The FAFSA must be completed before a Federal Stafford Loan can be considered. You can file an FAFSA electronically. Be certain to include each school's FAFSA code to ensure that the results are sent to that school's financial aid office. The earlier you file your FAFSA, the more likely you are to obtain the full amount of financial aid for which you are eligible!
Review your Student Aid Report and Award Letter
Three to four weeks after filing your FAFSA, you should receive a copy of your Student Aid Report (SAR). A copy will have also been sent to each school that you indicated on the form. A few weeks later, you should receive an award letter from the school(s) detailing your eligibility amount for each school program (i.e., grants, loans, work study, etc.) You must respond, indicating which aid you will accept and return the form to the school's financial aid office.
Apply for the Federal Stafford Loan
Once you have received your award letter and it indicates you have been awarded the Stafford Loan, after returning the letter to the school's financial aid office you can conveniently apply for the Stafford Loan online. Then, print and sign the promissory note and present it to your school for certification. Remember to keep a copy of all records. If you use the paper application method, be certain to mail the application to the address specified and remember that a FAFSA and Stafford Loan application must be completed each academic year while you are in school.
How much can you borrow with a Stafford Loan you ask. Well, you can check both the Undergraduate Stafford Loan Limits here or the Graduate Stafford Loan Limits here.
Processing the Stafford Loan
Once the lender has received the promissory note, the loan funds will be made available to the school for disbursement. Your school will apply the loan amount and if there is any money left over, you can either:
- request that a check be issued to you, or
- allow your school account to retain a credit balance, or
- have the remaining funds applied back to the loan.

PRIVATE STUDENT LOANS

If your FAFSA report indicates that you do not meet the requirements for federal funding, or the amount is below what you need, consider applying for a private student loan using such services as EStudent Loan or Simple Tuition. They offer online loan comparison features that makes choosing a loan a simple process.

Similar to federal student loans, private student loans can also be issued to either the student or to their parents or guardians. While these loans also have a higher limit amount, repayment of the college loan is not expected until after graduation and the interest accrues immediately.

Private loans may be used for any education related expenses such as tuition, room and board, books, computers, and past due balances. They are often used to supplement federal student loans, grants and other forms of financial aid such as scholarships, in stances where these funds were not sufficient enough to cover the full cost of tuition. Also, many international students studying in the United States can obtain private college loans with a cosigner who is a United States citizen or permanent resident.

Private college loans are not guaranteed by any government agency and are made through banks or finance companies. Advocates of private student loans suggest that they combine the best elements of the different government loans into one in terms of offering higher loan limits than federal loans, allowing students to fill the budget gap. They also offer a grace period with no payments due until after graduation that can be as high as 12 months after graduation.

Most private loan programs are tied to one or more financial indexes, such as the Wall Street Journal Prime rate or the BBA LIBOR rate, plus an overhead charge. Because private loans are based on the credit history of the applicant, the terms will vary from lender to lender. Students and families with excellent credit will generally receive lower rates and smaller loan origination fees than those with less than perfect credit. This is in contrast to federal loan programs that deal primarily with need-based criteria, as defined by the EFC and the FAFSA. For many students, this is an advantage to private loan programs. Their families may have too much income or too many assets to qualify for federal aid, yet have insufficient assets and income to pay for college without having financial assistance.

Shopping for a Private Loan

It is suggested that you shop around on ALL terms, not just respond to "rates as low as..." tactics that are sometimes little more than bait-and-switch. Examples of other borrower terms and benefits that vary by lender are deferments or the amount of time after leaving school before payments begin and forbearances, which is the period when payments are stopped temporarily due to financial hardship). These policies are solely based on the contract between lender and borrower and not set by Department of Education policies.

Private Loan Fees

Almost every private college loan carries an origination fee, the one-time charge based on the amount of the loan. These fees can either be taken out of the total loan amount or included to the total loan amount, often at the borrower's preference. Some lenders offer low-interest, zero fee college loans, but these are usually available only to those with high credit scores of at least 800. While each percentage point on the front end fee gets paid once, the percentage point on the interest rate is calculated and paid throughout the life of the loan. Some have suggested that this makes the interest rate more critical than the origination fee.

In fact, there is any easy solution to the fee-vs.-rate question: All lenders are legally required to provide you a statement of the APR (Annual Percentage Rate) for the loan before you sign and commit to the promissory note. Unlike the "base" rate, this rate includes any fees charged and can be thought of as the "effective" interest rate including actual interest, fees, etc. When comparing loans, it may be easier to compare APR rather than "rate" to ensure an apples-to-apples comparison. APR is the best yardstick to compare loans that have the same repayment term; however, if the repayment terms are different, APR becomes a less-perfect comparison tool. With different term loans, consumers often look to "total financing costs" to understand their financing options.

Generally, there are two types of private college loans: School-Channel and Direct-to-Consumer.

School-Channel Loans
School-channel loans offer borrowers lower interest rates but generally take a little longer to process. These types of loans are "certified" by the school who signs off on the borrowing amount. The college loan funds are then disbursed directly to the school.
Direct-to-Consumer
Direct-to-Consumer private loans, on the other hand, are not certified by the school. Colleges and universities have no interaction with the lenders of this type of loan. In this case, the student simply supplies enrollment verification to the lender, and the college loan is disbursed directly to the student. While direct-to-consumer loans generally carry higher interest rates than school-channel loans, they do allow families to get access to funds very quickly, in some cases, a matter of days. Some opponents of this type of college loan argue that the convenience is offset by the risk of over-borrowing and/or use of funds for inappropriate purposes, because of the lack of third-party certification that the amount of the loan is appropriate for the education finance needs of the student.
Direct-to-Consumer private loan programs are quickly becoming a large growing segment of educational finance programs. As such, a number of providers are introducing these types of college loan products. Providers range from the large education finance companies to the specialty companies that focus exclusively on this type of college loan. Such loans will often be distinguished by indication of "no FAFSA is required" or "Funds disbursed directly to you" wording. Some sources of direct to consumer private loans include:
Each loan program is designed to make the private student loan process simple. They offer you loan comparison tools and other features so that you can choose the best one that is suited for your needs.

STUDENT LOAN DEBT

US Federal student loans and some private student loans can be discharged in bankruptcy only with a showing of "undue hardship." Bankruptcy Code Section 523(a)(8) determines what loans can and can not be discharged. The undue hardship standard varies from jurisdiction to jurisdiction, but is generally difficult to meet, making student loan discharges practically impossible through bankruptcy. While US Federal student loans can be discharged for total and permanent disability, private student loans cannot be discharged outside of bankruptcy. In addition, in 1997, under intense lobbying from student loan companies, The Higher Education Act (HEA) was amended, and defaulted student loans became among the most lucrative and easiest to collect type of debt.

These amendment allow for:

huge penalties and fees to be attached to defaulted college loan debt
remove bankruptcy protection for student borrowers
disallows debt refinancing
provides for draconian collection and punitive measures to be taken against student borrowers, including wage garnishment, tax garnishment, withholding of professional certifications, termination from employment, Social Security garnishment, and others.

According to Harvard professor Elizabeth Warren, in a Wall Street Journal piece by John Hechinger, "Student loan debt collectors have power that would make a mobster envious." It is therefore important to understand the expectations involved when signing off on a college loan for your education. While it can be a relief to have assistance with paying a college loan for the cost of college, for many people, it can turn into a nightmare unfolded.

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