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Receiving Your Loan

Article on Receiving Your Loan

When it comes to receiving your loan, it is important to have as much information as possible. This will help college students as well as parents to know exactly what to expect and to avoid any problems further down the line.

Step 1: Knowing When to Expect Funds When Receiving Your Loan

Federal loan funds are disbursed after enrollment and the money will not all arrive all at once. Lenders will send the money in installments called disbursements that are usually based on academic periods such as semesters or quarters. Most private student loans are sent as soon as the loan is approved. The timing of these disbursements will vary from school to school as well the loan program. Loan proceeds to first year students who are first-time borrowers will not be disbursed until 30 days after enrollment, based on federal student loan programs. Students or parents may check with their financial aid department to determine the school’s policies.

Step 2: Receiving Your Loan

The federal student money that is loaned does not come directly to the student, but are sent to the school on the student’s behalf. In some private student loans, the funds may be sent to the student or parent so ask the lender to know what to expect. The student’s school will then apply the funds to the outstanding balance on the school account. This normally includes the charges for tuition, fees, room and board, and most other school charges. If there are any funds remaining after these charges are paid, the student will receive them to cover other education related expenses.

Step 3: What You Should Do After Receiving Your Loan

Students need to attend classes and keep their grades up to be sure they remain eligible for their loans. Federal law will require schools to create and uphold standards of Satisfactory Academic Progress (SAP) for students who receive federal financial aid. To keep receiving your loan disbursements, the financial aid office will have to verify that the student has met the school’s requirements. This process is called certification and if the school isn’t able to certify that the student is enrolled in at least a half-time basis and are making satisfactory academic progress, federal funds will be stopped immediately.

Step 4: Repayment After Receiving Your Loan

Various loans, including state, federal and private loans, have different repayment plans. Students and parents should create a list of all loans and include the total amount due, rate of interest, when that interest starts being accrued, any other fees that are to be paid, minimum payment amounts, due dates (day of the month), and when the payments must be started. Under certain circumstances, some loans are able to be deferred for limited amounts of time or payments lowered, dependent upon the student’s or parent’s ability to pay. Because student loan repayments are usually the start of the student’s credit history, every effort should be made to make timely payments.

Knowing what to expect after receiving your loan is key to preventing unexpected surprises that could possibly negatively impact your credit report. Feel free to browse around the rest of this website for some more helpful information related to financing education.