How to get a student loan
College tuition isn’t cheap. If you’re thinking about going to college for the first time or going back to college, you’re probably wondering how you’re going to pay for it. Most college students find that they need to borrow money, and Federal Student Loans are the most common way to get funding for higher education.
To apply for a student loan, you’ll need to fill out the Free Application For Student Aid (FAFSA). Before you begin, make sure you have your social security number and information about your income (or your parents’ income) readily available. You’ll find out what you qualify for in your award letter from your school.
Federal Student Loans
There are several different types of Federal Student Loans available, and you may qualify for one or more of them.
Perkins Loans are being phased out, due to current legislation. Perkins Loans are need-based, and the Perkins program will be ending on September 30, 2017. If you currently have a Perkins Loan, contact your lender for information about how long your funding will continue.
Stafford Loans are the most common type of Federal Student Loan. There are two types, Subsidized and Unsubsidized. Stafford Loans have a low origination fee (1.069% at the time of the writing of this article), and various repayment options.
Submit a Stafford Loan application by completing the FAFSA.
Subsidized Stafford Loans
Subsidized Stafford Loans are offered to undergraduate students only, and only those with demonstrated financial need. One of the benefits of a Subsidized Stafford Loan is that the U.S. Government pays the interest on your loan while you’re in school and while your loan is in deferment.
Submit a Subsidized Stafford Loan application by completing the FAFSA.
Unsubsidized Stafford Loans
Unsubsidized Stafford Loans are available to both undergraduate and graduate students, regardless of financial need. Unlike Subsidized Stafford Loans, the interest on an Unsubsidized Stafford Loan accrues while you’re in school and is added to your loan balance.
Submit an Unsubsidized Stafford Loan application by completing the FAFSA.
Parent PLUS Loans
The Parent PLUS Loan is a loan that your parents can get to help you afford your higher education. This loan is given to the parents of dependent undergraduate students. At the time of the writing of this article, Parent PLUS Loans have a 4.276% origination fee, and a 7% interest rate. To be eligible for this kind of loan, parents cannot have an adverse credit history.
Grad PLUS Loans
The Graduate PLUS Loan is similar to the Parent PLUS loan (at the time of the writing of this article, the Grad PLUS Loan has a 4.276% origination fee, and a 7% interest rate) but is offered to graduate students, as opposed to parents of undergraduate students.
State Student Loans
Your state may offer student loans to its residents. Click your state below to go to check your state government’s website for state student loan options:
Private Student Loans
Generally, private student loans should be your last option, after you’ve applied for government loans. Private loans usually have higher interest rates than Federal loans, and often have less favorable repayment terms.
How do student loans work?
After you fill out the FAFSA, you’ll be notified by colleges you’ve applied to about Federal loans for which you qualify. You can accept the loans or turn them down – simply applying for a loan does not make you obligated to take any loans that are offered.
Student loan repayment
After you’ve accepted your loans, generally speaking, you will not have to make payments while you’re in college. For some loans, interest accrues while you’re studying, and for others, it doesn’t.
Once you’ve graduated (or left school without graduating) you’ll have a grace period (usually six months) where you won’t have to make payments on your loans. Once the grace period has expired, you must begin making payments.
Student loan repayment plans
There are a number of different options when it comes to repaying your Federal loans, including the Standard Plan, the Extended Plan, the Graduated Plan, Income-Driven Plans, and the Income-Sensitive Plan. The Income-Driven Repayment Plans can be a great choice if you’re struggling to make ends meet.
Refinancing your loans can also help to lower your payments. Find out about refinancing federal and private student loans at SoFi.com.
Student loan interest rates and accrual
Check with your lender to get details on your interest rate and how that interest accrues. Some lenders offer reductions in interest rate for consolidating several loans, or for enrolling in an auto-payment plan.
Student loan deferment
There are situations where your loan can be returned to deferment status. Read more about those situations HERE.
Student loan forbearance
There are two kinds of student loan forbearance: general (or discretionary) and mandatory. At your request, your lender may grant you a general forbearance if you are having difficulty making payments, you have unusually large medical expenses, you’ve had a change in employment, or some other reason that your lender accepts as grounds for forbearance.
Your lender must grant you a mandatory forbearance in a few specific circumstances. Read more about those circumstances HERE.
Student Loan Forgiveness
There are certain situations where your student loan may be forgiven. These circumstances include the Closed School Discharge, Public Service Loan Forgiveness, Teacher Loan Forgiveness, Perkins Loan Cancellation and Discharge, Total and Permanent Disability Discharge, Discharge Due to Death, Discharge in Bankruptcy, False Certification of Student Eligibility or Unauthorized Payment Discharge, Unpaid Refund Discharge, and Borrower Defense Discharge.
Student Loan Forgiveness Act of 2016
President Obama proposed some changes to the way student loan repayment works. If you had an existing loan prior to July 1, 2016, these changes likely won’t affect you. If you originated a new loan after July 1, 2016, check with your lender to see what repayment options are available to you.
Public service loan forgiveness
Borrowers who work in an approved public service job can be eligible to have the balance of their loans forgiven after ten years of payments, provided the borrower maintains the public service job during those ten years. Talk to your lender about making sure you’re in the right repayment plan for this type of loan forgiveness.
Teacher student loan forgiveness
One of the benefits of going into the education field is that the US government currently offers some loan forgiveness for teachers. The Teacher Loan Forgiveness Program requires that you teach full time for five complete, consecutive academic years in a qualifying elementary or secondary school that serves low-income families. You must also meet a number of other requirements.
If you satisfy all of the requirements, you can be eligible for the forgiveness of up to $17,500 on Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans.
Looking for your lender’s login? Here are links to a few of the bigger lenders: