Government Student Loans
Applying for government student loans is probably one of the most exasperating experiences a person will have. It's a lengthy process that involves providing financial records, filling out student aid applications, obtaining financial counseling, and entering into legal contracts.
The good news is getting government student loans can be simplified by making a visit to StudentLoans.gov. This website is supplied by the Office of the U.S. Department of Education and provides information on everything from getting financial awareness counseling to student loan consolidation.
Students need to learn about the application process, different types of loans and payment options. In order to apply for financial aid students must prepare a Free Application for Federal Student Aid (FAFSA).
Institutes of higher learning base financial aid offers on the results of FAFSA. Students will need to gather financial information including social security or alien registration number, driver's license number, federal tax returns, types of benefits received such as child support or alimony, and information regarding any owned assets such as investments, real estate, or money held in bank accounts.
Students who take out loans through the Direct Loan Program must go through entrance counseling before the first loan disbursement is made. This is needed to ensure borrowers understand their responsibilities of loan repayment.
Financial aid can be obtained to attend accredited colleges, graduate school, professional school, or career school. Depending on students' personal finances they might qualify for state or federal grants which do not have to be repaid. Another option is work-study programs which let students earn money to pay for their education.
Most often, students have to apply for federal or private student loans to pay for any remaining balance. Common choices include the Federal Perkins Loan Program, PLUS Loans, or Stafford Loans.
Government student loans offer benefits that can't be obtained from private loans. It is more advantageous to seek out federal loans first because borrowers don't have to begin making payments until they graduate or attend less than half-time. Furthermore, interest rates are substantially lower and usually a fixed rate.
Federal college loans don't require borrowers to have a co-signer or undergo a credit check. This aids in avoiding having a hard credit inquiry and doesn't adversely affect FICO scores. However, once approved borrowers must sign a master promissory note which documents their promise to pay the principal balance and accrued interest.
The U.S. Department of Education offers two types of loans which are categorized as subsidized or unsubsidized. The primary difference is subsidized college loans are offered to undergraduate students who demonstrate a financial need, whereas unsubsidized loans are available to undergraduate and graduate students without having to show financial need.
The downside of unsubsidized loans is students are required to pay interest while in school. If students enter into a forbearance agreement or loan deferment the interest accrues and is added to the principal amount.
Schools determine the loan amount that students receive each academic year based on FAFSA. However, students might receive additional funds if they are classified as a dependent student and their parents do not qualify for PLUS loans through the government.
Taking time to plan ahead and become educated about the various types of federal college loans will help students keep rein over personal finances and help prevent loan default.
We invite you to visit our blog and learn more about government student loans, private student loans, and college loan consolidation.
Published on February 12, 2013 at 04:59 AM
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