The Student Loan has become an inevitable part of education these days. And there is nothing strange about it, the market and the time in which we live dictate such a trend.
The benefits of quality continued education cannot be understated in a culture that constantly evolving to meet new technology and business challenges. For both parents and professionals, locating a solid financial resource for further educational opportunities has become almost mandatory.
Certainly, for parents, the goal is to provide their children with a college education that give them more opportunities than they, themselves, had. For professionals, in business or other areas, the need to stay relevant to the changing needs within that profession prompt the search for education. Yet, in either case, the costs associated with secondary schools and technical institutes can be immense.
Types of assistance
There are various types of assistance available for people who want to further their education, some government-funded while others come by private means. For anyone who needs student loans or other financial aid to pay for school or educational training, there are programs that make this possible. It is not only possible but its financial assistance is made widely accessible and affordable. Student loans are perhaps the most widely used form of educational financial assistance although scholarships, work-study program, and family contributions do play a significant part as well.
Reason to take student loans
What are some of the reasons why student loans may still be one of the most attractive options out there? Certainly, the first point you could make is that borrowers will not be required to pay back the student loan until after you complete your education. This means the payments will be deferred.
Beyond this obvious advantage, there also others associated with interest rates and payment terms. Many of those lenders who offer student loans do so at lower interest rates than other types of loans. Also, lenders are more apt to work with student borrowers by making repayment terms flexible.
Charges on interest rates for student loans may also be deferred until after a student finishes coursework and start paying the loan back.
Also, one of the biggest advantages of the student loan is that interest rate for federal loans is fixed. The interest rate is the same for every borrower and is set for July 1 of every year.
On the other hand, private loans are credit based. Because of that, the interest rate is different for every borrower. The biggest role in obtaining good interest rate have your credit score. So, students with better credit will likely receive a better interest rate.
In case that you don’t have a credit history or have a low credit score, having a cosigner may improve the likelihood for loan approval. This will also help to get a lower interest rate.
Types of student loans
In United States student loans come in several varieties. They are basically split into federal student loans and private student loans.
There are two main types of student loans offered by the United States government.
- The first one is the Stafford Loan. With this loan, any funds for tuition and enrollment costs for the college or university are given to the borrower by banking institutions or lending companies that have partnered with the federal government.
- The second type is called the Perkins Loan. This loan is offered directly by the school or university, which operates directly as a lender. Specific application processes are associated with received student loans or financial aid from governments or schools.
Yet, for many professionals, the ways they receive financial aid make come from taking out personal loans as student loans. In some cases, a student loan may come from the professional’s employer who wants them to have updated training and expertise. There are definitely many options to consider. If you desire more information, you will have to do research to see what student loan opportunities may be available to meet your circumstances. You owe it to yourself to pursue further education and possibly help yourself but your children as well.
The Plus Loan is intended for parents of students. To be eligible, a student must be enrolled at least halftime. PLUS is an acronym and means “Parent Loan for Undergraduate Students”. Graduate and professional students, at participating and eligible post-secondar institutions, can also take this loan.
- The lender of PLUS LOAN is the U.S. Department of Education
- To get this loan you must not have an adverse credit history
- The highest amount you can borrow is calculated by the formula, the cost of attendance minus other financial aid received
Private loans are another option to pay for your schooling expenses. We suggest that you consider this option as your last because this is the most expensive option for you.
Private loans are quite different from the federal ones. First of all, they are credit-based loans. So you can expect from the lender to review your ability and willingness to repay—before making the loan.
The interest rate will be different from federal (higher), and you will, probably need a cosigner.
A private student loan offers a variety of options for repayment. Some offer an option to start paying off while still attending school. This can help you to reduce the interest rate and/or total loan cost.
Before you decide and apply for a private student loan, be sure to either graduate or not, the loan must be returned. This is important because defaulting on a student loan can have a negative impact on your credit health.
How can I get a student loan?
If you want to get a student loan as a part of a government program, you should visit first your school’s financial aid office. There you can find all the necessary information and what steps to take.
One thing is certain, and that is that you will have to complete the FAFSA application. FAFSA form will determine what type of aid you’re eligible for.
In order to fill in the FAFSA form, you will need to provide detail about your finances and finances of your parents. That includes your assets in the bank, income levels, investment accounts, Social Security Numbers and so on.
When your FAFSA is processed, you will get financial aid offer from your school.
Depending on the offer, you have the option to accept or decline. If you choose to accept the funds, you will need to sign a loan agreement.
Who Qualifies for a Student Loan?
Almost everyone qualifies for student loans. Generally, a student with the greatest financial need can borrow under the best terms.
Before you apply for student loans you must determine if you independent student or you dependent on your parents (dependent student).
When you’ve figured out your dependency status, it’s time start gathering financial information.
According to U.S Department of education financial information includes tax returns, bank statements, and information about other financial assets. For the application, you’ll also need social security/immigration cards.
One of the criteria you must satisfy, to get financial aid is your qualification. In other words, you may be applying to an accredited school, but you can be disqualified if they do not count toward a certificate or degree.
To prevent this, you should talk to a counselor about whether your courses are acceptable under your loan program.
After you satisfy all criteria, it’s time to start comparing student loan programs. You can choose between several different types of student loans, each with its own terms and conditions. Because of this, it’s important to understand how each works in order to make the best decision about financing your education.
How long does it take to get a student loan?
Time is differed by the lender and by the type of loan (federal vs. private).
Time to Get a Federal Student Loan
Time depending on when an how the FAFSA is filled. Also, it is important to do you signed electronically and whether you provide a valid email address. In this case, can take 3 days to 3 weeks for the FAFSA to be processed.
Based on the FAFSA data, the financial aid office will determine your financial aid eligibility. If you are eligible, it will prepare a financial aid award letter. This letter typically arrives in late March or early April.
In this letter, you will find information about need-based federal student loans.
Next step is to sign a Master Promissory Note (MPN). MPN covers a continuous period of enrollment of up to 10 years. After you sing, the college will disburse the federal student loan funds.
Time to Get a Private Student Loan
Private student loans programs announced that they provide credit decision very fast. In practice, this means that you, as borrowed, will be denied in seconds. Final approval for the eligible borrowed takes more time.
In case that a loan is approved, you can expect that lender will send the loan proceeds to the college or to you, within 2 weeks to 2 months.