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Applying For A Student Loan
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Article on Applying For A Student Loan
For most students, paying for a college education requires financial aid which is likely to involve the dreaded student loan. This guide is the first step in applying for a student loan by providing the necessary steps and information needed before starting the process.
Organizing
Before any applications can be completed, there is a great deal of information that has to be obtained. Regarding school itself, the names of schools that are being considered, program of study, housing, and full or part time status must be known before applying. Financial information from that year’s taxes as well as any bank or investment accounts is also imperative. One confusing thing for students with divorced parents is whose financial information to enter on loan applications. In most circumstances, the parent that claims the student as a dependant for tax purposes will provide their information when applying for a student loan.
The FAFSA
To be eligible for virtually all student loans, this form must be completed. Each school has its own deadline by which the FAFSA must be completed, but try to get it done as soon after the new year begins as possible. There is a worksheet that can be printed that allows students to gather information prior to opening the actual application online. Most importantly, when applying for a student loan, make sure the FAFSA is completed on the www.fafsa.gov website. Any other site will charge a fee to submit this free application.
Getting Federal, State and Institutional Loans
When filling out the FAFSA, the student is automatically applying for many state and institutional loans. Some state and institutional loans may require separate applications though, so it is a good idea to check the requirements. After the FAFSA has been processed, the federal and state governments provide the school with information regarding any aid they are willing to provide. The school will then send a letter to the student detailing federal, state, and institutional aid that is granted.
Subsidized or Unsubsidized?
One loan comes in two forms, the Federal Stafford Loan. Almost anyone can qualify for this type of federal loan, but there is a catch; need based loans are subsidized and the rest are not. What does this mean? With a subsidized loan, the federal government pays the accruing loan interest while the student is in school and during any time that there is a forbearance or deferment on the loan. While almost anyone can get an unsubsidized loan, the interest is the student’s responsibility.
Private Loans
If enough aid is not provided through other sources, a higher interest, riskier option is available. In recent years many students are applying for a student loan through banks and other lenders. These loans have a higher percentage rate and require a credit check. In many cases a co-signor is required. This should be a last resort option to pay for education as they have less flexible payback options.
The keys to applying for a student loan are knowing the options available, being aware of requirements and deadlines, and organizing the materials needed beforehand. Almost everyone who applies gets some aid, so get the necessary information together and go for it. For more information on the various forms of financial aid available for education, have a browse around this website.
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