Student loans can be defined as the type of loans given to students who have graduated high school to help them pay for their college education. It covers their tuition fee as well as other miscellaneous charges such as books, residency, etc. discontinuing education because of the expenses is one of the main reasons which costs young people their future. Student loans have benefits such as lower interest rates and leniency in payments which doesn’t let the students’ potential to go to waste. The procedure of application for student loans is also easy.
According to the College Board, 6.97 million students out of 20.5 million students took loans for their education in 2016. A recent Princeton Review says that 98% of the students and their parents said that they need loans to pay for their education. The Institute for College Access and Success reported that 68 percent college seniors graduated with some form of college loan debt.
According to the U.S Department of education, student loans must be paid with interest. Judging by the application for student loans, one might think that this is all that there is. But that is not the case. One should gather all the necessary information before applying for the loan to avoid any conflicts. There are basically two types of loans: Federal loans given by the Federal Government and Private loans given by private lenders such as banks, companies, and the institutes etc. following prompts cover all the information you need to know before applying for any type of student loan.
Methods for Application for Student Loans:
The process of application might be time-taking. But it’s worth it since it saves you any troubles afterward which may arise due to lack of information on your part. See the following steps:
Determine Your Need:
The very first task for you to take care of before applying for any student loan is to determine the amount of money you need to borrow. Calculate all the expenses by making a list of all the stuff which will cost you money. Also, take into consideration any savings you or your parents might have. So that you’ll have to take as little loan as possible to pay the least amount of interest. The things you need to spend money on include tuition fees, books and supplies, residency, transportation, and any other personal expenses you might have.
Subtract your EFC from the anticipated expenses to determine how much extra money you’ll need for your college education.
Apply for FAFSA:
If you want to apply for federal loans, you need to fill out the application form which is FAFSA short for Free Application for Federal Student Aid. This application form determines whether you fit the eligibility criteria for the application for student loans for both the Federal and Private types. The Federal Government grants $150 billion each year for work-study funds and loans etc. these grants and work-study funds do not require any repayments. This can be of great help as it reduces the amount of money you need to borrow for the education.
Determine the Suitable Loans for you:
Once you fill out the FAFSA form, the results will tell you which type of loan you qualify for. There are three types of Federal Loans:
- Subsidized Stafford Loans: These are government funded loans in which the government pays the interest while the student is still in school and until repayment begins.
- Unsubsidized Stafford Loans: these loans are not need-based like the previous and are not dependent upon income. The students have to pay the interest along with repayment.
- Direct Plus Loans: These loans are made for graduate and professional students or the parents of undergraduate students. The loan helps to pay for educational expenses not covered by other financial aids.
- Direct Consolidation Loans: This loan helps you to get a loan from a single loan servicer by allowing you to combine all the Federal Government loans you are eligible for into a single loan.
- Perkins Loans: This is a school-based loans program in case of extreme financial need. In this type of loans, the lender is the school itself and not the Federal Government.
Contact Your School’s Financial Aid Office:
Contact your school or college’s financial aid office to get the right guidance on the procedure for application for student loans, the deadlines, the eligibility criteria for grants, scholarships, and other types of financial aids.The results of FAFSA application will determine the types of loans you qualify for.
Make sure to gather the documents you need for FAFSA form beforehand.
- Your Social Security number or alien registration number.
- Your most recent federal income tax returns, W-2s, and other records of money returns.
- Bank statements and records of investments.
- Records of untaxed income.
If you are dependent upon your parents, you need to provide the same information of your parents.
If you’re applying for loans from private lenders, you’ll need to provide additional information as required by the lenders. This includes your driving license to prove your identity and paycheck stubs to verify your employment history.
There are two ways to look at a student loan. One is an investment that could make your future. The second is a debt which will be on your shoulders for a long time. Before the application of student loans, be they Federal loans or private loans, determine the suitable type for you. However, federal student loans generally facilitate the students with lower interest rates, no credit checks and no repayments of loans while you are still studying.