How to get a student loan: a step-by-step guide

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Start by completing the FAFSA for federal student loans before applying for private loans to pay for your college tuition. (iStock)

If worrying about how you’ll pay for college keeps you awake all night, you’re not alone. Today, according to the College Board, tuition fees for a public four-year college or university – traditionally the cheapest option – are around $ 11,000 per year.

A private, nonprofit four-year college or university can cost over $ 37,000 per year. And none of those numbers include room and board, books and supplies, transportation, and other personal expenses.

Unsurprisingly, many students apply for student loans, which, unlike scholarships and grants, must be paid back with interest. Not sure how to get a student loan? You can do that. Just follow these steps.

What to do before applying for a loan

Before applying for a student loan to fund your college education, ask yourself these questions.

  • What is the real cost of college tuition? Aside from tuition and fees, add up all expenses such as room and board if you live on campus, meal plans, books and supplies, transportation to and from campus, and any personal expenses you owe.
  • Will you work while you are in college? Work can help offset college tuition fees… Some employers offer tuition compensation. Consider a work and study program if your school offers one.
  • Will you be living on campus or off campus? The average rental price for a one-room apartment in 2020 was $ 1,690, according to Rent.com… A large three-room apartment for rent for more than $ 2,000 a month. The average cost of living on a campus ranges from $ 4,000 to $ 5,000.
  • Are you planning to apply for grants and scholarships? Grants and Scholarships are free money for Help pay for college… Unlike student loans, you do not need to repay them, unless your enrollment status changes or you abandon the program ahead of time. Grants are usually need-based, while scholarships can be merit-based or need-based.

How to get federal and private student loans

If you are like most students, you need to apply for federal or state education. private student loans – or a combination of them – to pay for your education. It is important to understand your student loan options and the steps you need to take to apply.

Credible makes it easy explore your private student loan options and compare rates from multiple lenders.

Complete the FAFSA

A free federal student aid app is available. from October 1 for the next academic year. Filling in the FAFSA is the first step in applying for student loans and the only way to qualify for federal student loans.

The FAFSA uses your financial information to determine what types of federal student assistance you are eligible for. You will need to complete the FAFSA every school year. After filing a FAFSA application, you may have access to several types of financial assistance, including:

  • Scholarships and federal grants
  • Federal student loans
  • Federal work-study programs
  • State aid

The easiest way to submit a FAFSA is online with myStudentAid mobile app… You can also print 2021-22 FAFSA PDF and send it by mail.

Review your proposal for financial assistance

After you submit your FAFSA and receive your Financial Assistance Authorization, each school that accepts you will send you a Financial Assistance Letter. This is what you will find in every offer.

  • Cost of Attendance (COA): This is what you can expect to pay for one year of school, including tuition and fees, books and supplies, room and board, transportation, and other expenses such as costs associated with a disability program or work-study.
  • Expected Family Contribution (EFC): This is used to determine the amount of financial assistance you will receive.
  • College grants and scholarships: Grants are usually need-based, but scholarships can be merit-based or need-based. Neither one nor the other is refundable.
  • Federal work-study programs: These programs give you jobs no matter whatcampus and salary.
  • Federal student loans: Direct student loans can be subsidized (the government pays interest while you are in school) or unsubsidized and you have to pay back when you leave school.

When you decide where you want to study, you will need to call the school’s financial aid office and tell them which loans you want to accept or decline.

Get federal student loans

If you need to take student loans to cover all or part of the college tuition fees, you have two options: federal and private. Insofar as government supports federal loansThey are often cheaper than private loans, do not require a credit check, have income-adjusted repayment plans and fixed interest rates.

Federal loans may be eligible for loan forgiveness so if you are struggling to make a payment, you have more room for relief than with private loans.

Federal direct loans can be subsidized or unsubsidized. Both offer benefits such as low interest rates, flexible repayment options, repayment and deferral programs, and the ability to consolidate your loans. But there are some key differences between the two.

Subsidized

  • For bachelors only
  • Requirement Based on Necessity
  • Lower borrowing limits
  • Interest is subsidized during deferrals

Unsubsidized

  • Undergraduate and graduate students are eligible
  • No need based on requirements
  • Higher borrowing limits
  • Interest is not subsidized during grace periods

There are three main types of federal student loans: Direct subsidized, direct unsubsidized and direct PLUS loans

Direct subsidized loans

Students who can show financial need can apply for direct subsidized loans. These loans usually do not earn interest while you are in school or during the grace period or grace period. Interest will not be credited if you are in school for at least half of the working day, but will start to rise after you graduate from school or drop below half.

Direct subsidized loan issuance limits: up to USD 5,500 per year (subject to change)

Direct unsubsidized loans

Direct unsubsidized loans are unsecured (which means you don’t need collateral to qualify) and are funded from the federal budget. You don’t have to have financial needs or a good credit rating to qualify for it. Interest rates depend on your educational level and begin to accrue at the time you receive a loan. After a six-month grace period, you make monthly payments to the US Department of Education, which gives you time to look for work.

Limits for issuing a direct unsubsidized loan: up to $ 20,500 per annum minus any subsidized loans you may receive over the same time period (subject to change)

Direct loans PLUS

Direct loans PLUS help you pay for expenses related to your education that are not covered by other financial assistance. They are available to both graduate students and professional students, as well as parents of undergraduate dependents. You do not need to indicate your financial needs, but your credit score is taken into account when calculating the loan amount. You will be making payments to the US Department of Education.

Direct PLUS Loan Award Limits: cost of attendance (determined by the school) minus any other financial aid received

Consider an accomplice

It’s no secret that students who need a loan to pay for all or part of their tuition are more likely to receive better rates and conditions. if they have an assistant.

According to Credible data analysis

While a federal student loan usually does not require a co-supervisor, having one can help you secure a higher interest rate.

And since banks, credit unions, and other financial institutions offer private student loans, your credit matters. If you have little or no credit history, it can be difficult to get a private student loan. A partner with good or excellent credit history can help because it makes it easier to get a loan approved, often at a lower interest rate. Choose someone you know and trust, such as a parent, guardian, spouse, brother or sister, or friend.

Compare Private Student Loans

Before taking out a private student loan, it is best to exhaust all federal loan, scholarship and grant options, and work and study programs before applying. Interest rates on private student loans are usually higher than federal student loans.

Private lenders have their own methods of evaluating applications, therefore shopping comparison this is the only way to know if you qualify. It is also the easiest way to make sure you are getting the very best interest rates. By shopping around, you also show your co-follower that you are investing time and effort, which can help them feel a little more at ease accepting the risk of re-applying for your student loans.

With Credible, you can compare rates on private student loans from several lenders.

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