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How To Get A Student Loan

If you are planning on going to college then you will need to organize some form of funding or financial aid to cover the cost. College can get expensive, you will need funding to cover the cost of registration, tuition, accommodation, textbooks, and daily living expenses among other costs. If you don’t have a college fund set up for you, you can fund your studies by applying for scholarships, grants, or getting a student loan. Getting funding for your studies can sometimes be a complicated and drawn-out process. For example, trying to get a parent or family member to be a co-signer on your loan, or trying to build credit to apply for a loan can get tricky. This Scholaroo blog explains how to get a student loan to help you cover the cost of your college education

  1. Applying for a Federal Student Loan

To apply for a federal student loan you must complete a Free Application for Federal Student Aid (FAFSA). The application is available from October 1 for the upcoming academic year. You can apply at any time throughout the year, but be sure to check your state and school deadlines first. You can fill it out online by creating a Federal Student Aid (FSA) ID and password. Filing out the FAFSA application will qualify you for student loans and other federal financial aid. 

Here is what you need to apply for the FAFSA: 

  • Your Social Security Number or Alien Registration Number (for non-citizens). 
  • Your parents’ social security number.
  • Your driver’s license number if you have one.
  • Your (or your spouse’s or parent’s) federal tax information, tax documents, and tax return information from the previous tax year.
  • Records of untaxed income.
  • Bank statements and information on your (or your parent’s) cash, savings, and checking account balance. Information on investments and assets.
  • List of colleges and/or career schools you are interested in and applying to.

Here is what you need to know about the FAFSA:

  • After you submit your FAFSA, your information will be sent to the colleges and/or career schools you listed on the form. 
  • Once you have submitted your FAFSA, you will get a Student Aid Report (SAR). The SAR will contain information on your Expected Family Contribution (EFC) which your school uses to calculate your eligibility for certain types of federal student aid. 
  • As a first-time applicant, you will receive an aid offer from the colleges or career schools you listed on your FAFSA. The aid offer will give the type and amount of aid you could receive at that school. You could receive aid in the form of a student loan, grant, and sometimes a scholarship. You should review and compare your offers, and decide which school to attend based on how much your aid could meet your college costs at that school. 
  • If you are an aid renewal applicant, you will receive an aid offer from your school stating how much aid you could receive at that school. 
  • You will have to formally accept the school’s aid offer, and your school will handle your aid. You should ask your financial aid office for the details on how your aid will be paid out, what it will cover and how much money you may receive directly. 

You can get three types of student loans as a college student. Either a direct subsidized loan, a direct unsubsidized loan or a direct PLUS loan. If you qualify for a direct subsidized loan, the government will pay the interest that accrues on your loan for the duration of your studies. With a direct unsubsidized loan, you will be responsible for paying the interest on the loan, even while you are in school. Direct PLUS loans require a credit check, and if you do accept this kind of loan you or your parents will be responsible for the complete repayments.

2. Applying for Private Student Loan

Applying for a private student loan is another viable option for funding your college costs. If you have exhausted your free money options such as financial aid, grants, scholarships, tuition waivers, and gifts from family, then you should consider applying for a private student loan. You may also need to apply for a private loan to fill the gaps that your financial aid does not meet.

With a private student loan, you approach a bank, financial institution, credit union, or online lender. There is typically no deadline or opening period that you need to worry about, just apply in time for you to start school with your funding sorted. You can apply online, or go physically to a bank or lender.

Here is what you need to apply for a private student loan:

  • Your social security number or alien registration number(for non-citizens).
  • Your residential address(permanent or temporary). 
  • Your school information, proof of enrollment, or acceptance. 
  • Your employment information
  • Your financial information, including income and expenses
  • Information about the loan amount request, as well as information about the financial aid you have been approved of. 
  • If you have a co-signer, whether it is a parent, family member, or friend. You may need to submit all their information too.

Here is what you need to know about applying for a private student loan:

  • If you do not have good credit, getting a private student loan may be tricky. There are very few lenders that will approve a loan application without a creditworthy co-signer. Without good credit of your own, you will need a credit co-signer for your loan application.
  • Each lender will have a different application and different application requirements, but also different conditions for the loan. 
  • Once you have applied for your private student loan, compare your offers from your lenders to find the lowest interest rate. A fixed interest rate will remain the same for the lifetime of the loan, and a variable interest rate will change depending on changes in the economy. 
  • The repayment options on a private student loan are different from those of a federal loan. You will forfeit benefits such as an income-driven repayment plan, and the opportunity to defer or forbear your loan if you cannot pay it. You also forfeit any student loan forgiveness. Pay attention to the information on repayments for your student loan. 
  • Take time out to find out about your hardship options. Some lenders offer forbearance options if you lose your job or have a medical emergency. Check the policy on your loan. 
  • Consider getting a co-signer release condition for your loan, so that your co-signer may be removed from your loan after you have made a certain number of payments. 
  • Find out about any discounts or perks you may be offered by your lenders, such as career counseling or loyalty discounts. 
  • After finding the best loan option for you, you will need to formally accept the best offer, and arrange for the loan to be paid out. 

FAQs

Can I apply for FAFSA without my parent’s information? 

Yes, to apply for FAFSA without your parent’s information you just need to apply as an independent student. If you are independent then you do not need your parental information to apply. The loan limits on your federal direct loan (or Stafford Loan) are also higher as an independent student. This is because it means that you will likely not get any assistance with your college costs or living expenses from a parent or guardian. If you are a graduate student or a medical student you are automatically regarded as an independent student. 

You still need to complete the FAFSA application and include your parent’s information in your application. But this does not impact your application process or obligate your parents to you or co-sign on your federal loan. 

How do I arrange a tuition installment plan?

Most U.S colleges and universities offer a tuition installment plan that can help you pay for your college little by little. This may help you avoid a student loan overall. To arrange one, you can approach your school financial aid/bursar’s offices and ask for assistance.

Are there loans that do not consider credit? 

Besides federal student loans, you can also get loans from a few private lenders such as Ascent’s Non-Cosigned Outcomes Based, which uses criteria other than credit or income. 

Are my parents obligated to pay for my student loan, if I can’t? 

Federal student loans offer income-driven repayment plans, which means you will pay based on the income you get. If you are not getting an income from a job, you can arrange to begin payments once you work. If you have a private student loan that your parents have co-signed, then they may have to cover your repayments until you can once you get a job. 

Why should I take out a federal student loan? 

There are a few benefits to this federal student loan. Firstly, they offer lower interest rates than private loans, and the interest rate is usually fixed. Secondly, you will not need a credit check or co-signer. You do not need to start repaying the loan until you leave college or change your college status to below half-time. 

Why should I apply for a private student loan? 

Sometimes your financial aid offer or your 529 college savings account may not meet all your college costs, so you will need extra money to cover everything. A private student loan is a great option in such cases, so you can cover the extra that you will need. 

How can I avoid applying for a student loan completely?

  • Get scholarships and awards for college. 
  • Apply for grants if you are in a graduate program or medical school. 
  • Ask friends and family for college gifts to help with your tuition. 
  • Get a college job.
  • Apply for sports-related scholarships. 
  • Find federal-work study opportunities.
  • Research the best-earning college degree.
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