loan
How To Get A Student Loan?
Paying for school is not easy. If you are lucky your parents or the company you work for will pay for your schooling, but everyone is not as fortunate. Borrowing money for college is common. About every 7 in 10 students have to borrow money to pay for college. There are two different types of student loans:
- Federal
- Private
If you are an undergraduate student, it is best to first try to get a federal loan. This is because they don’t require a credit history or a co-signer. In addition, they offer better protection for borrowers compared to private student loans.
Lets look into how you can get a federal and private student loan so that you can pay for your education.
Federal Student Loan
Federal Student Aid
The first thin you have to do is submit a free application for Federal Student Aid (FAFSA). This will determine how much financial aid you will qualify for. This financial aid is in the form of scholarships, grants, and work-study. The amount that your receive through FAFSA does not have to be repaid. FAFSA only takes 30 minutes to complete. You will have to complete a FAFSA form every school year. The difference between tuition and your FAFSA aid will be the amount you will need to pay.
Subsidized Loans and Unsubsidized Loans
There are two types of loans for undergraduate students. Subsidized loans are for undergraduate students who have a financial need. The subsidy covers the interest of the loan when a student is still in school.
Unsubsidized federal loans are not based on need. For these types of loans, interest starts to accumulate immediately.
Private Loan
For the remaining tuition balance that federal loans did not cover, you can consider a private school loan. This type of loan is a great option for those who have good credit or someone who will co-sign for them.
You can look into getting a private student loan from a bank, online lender, or a credit union. It is advised to shop around for a private loan so that you can find one with favorable interest rates.
As we already mentioned, to apply for a private loan you have to have good credit accompanied with a good income. Many times even if you meet the requirements, lenders will ask for a cosigner. If you don’t meet this qualification, the lender will definitely ask for a cosigner.
There are some lenders who will provide loans even without a co-signer. However, the interest on these loans are high.
Final Thought
Before you take out a loan that needs to be repaid, make sure you calculate how much you will have to pay back. Also make sure to have a solid plan on how you will pay back the loan. The last thing you want is to go head first into a student loan without having a game plan.
