How to Get a Student Loan

Few students can simply dip into their back pockets in order to pay the tab for their tuition, and even those who might be able to cover the cost of a semester or two might find it hard to pay for an entire 4-year education without a little help from an outside source. Often, this means that students must apply for and obtain loans in order to pay for school, and unfortunately, many students aren’t quite sure about how they should proceed in order to get the money they need.

How to Start a Search

how to get loansAny reasonable search for a student loan should begin with a Free Application for Federal Student Aid (FAFSA). This form, which students must fill out on a yearly basis, serves as the gateway to all of the loans provided by the U.S. Department of Education, and schools also use the information on the FAFSA in order to determine a student’s eligibility for grant money and some scholarships. In other words, filling out a FAFSA can help students get free money and beneficial federal loans. It’s an amazing tool, but unfortunately, few students take advantage of the opportunity. In 2012, for example, just 55% of students completed a FAFSA, according to data released by the U.S. Department of Education. Students who don’t fill out this form could be missing out on an intense amount of benefits.

When students do fill out a FAFSA, the data they enter is reviewed and a letter is generated by that student’s school that explains the options students have open to them. Sometimes the FAFSA contains a great deal of information about federal loans and grants, and sometimes the letter indicates that students aren’t eligible for some of the more spectacular types of aid that could help them to pay for school. For some, the search begins and ends here.

Students who get great news on the FAFSA may not need to do any more searching for a student loan. But those who don’t get the news they were hoping for may need to explore their options on the private market. These students can visit financial institutions they’ve worked with in the past, including the banks that hold their savings accounts, or they can visit banks and credit unions in the community and ask about loan products for school. Sometimes these local searches provide students with great deals.

The Internet can also be a great resource for loans for college students. Online tools (including the one we offer on this site) can help to match students in need with private lenders that can help. Often, websites provide comparison tools, so students can look at several loan products at the same time and make decisions about the products that are best for their specific situations.

How to Compare Loan Options

Students who explore all of their options for loans, including federal and private, may be left with a list of five or even 10 loans. They might be a little baffled about which product to choose, but looking for a few keywords can help to narrow the field. Those products that contain the words “subsidized” or “grant” typically contain help for a student in financial distress, and those should be the products that a student chooses first.

Looking at monthly payments can seem like a good next step, as some loans might require students to adhere to a monthly payment schedule that seems unreasonable. But the more important figure concerns the total cost of the loan. When all of the payments have been tallied, and the interest costs have been added in, students can see how much they’ll pay for the loan product as a whole. This is the figure that really should separate a poor loan from a better option.

If these figures aren’t outlined on an offer letter, the U.S. Department of Education repayment calculator can help. Here, students can estimate how much they’ll pay based on the repayment plan they select. This tool is

designed only for federal loans, but it can be a good tool for students to use on private loans too, if students look only at the “standard” repayment plan option. Private loans should detail this information, however, so calculators might not be required.

It’s also vital to determine what add-ons the loans have. Federal loans, for example, come with a suite of options that can allow students to tie their monthly payments to their income levels, and they might even allow students to discharge debt left behind when the payments are complete. Private loans might not provide anything that appealing, and that might allow a federal loan to seem like a better option.

Financial aid officers at most major schools are more than happy to go over loan information with students and help them to make good decisions about their loans. These people aren’t financial advisors, of course, but they deal with loans each and every day, and they might provide a level of insight that’s crucial for students who want to make an informed economic decision about the loans they’ll agree to.

How to Apply for Student Loans at the Federal Level

student-loans-applyStudents who want to take advantage of federal loans will work directly with the school they’re planning to attend. The school will provide an offer letter that details the types of loans the students can take and the amount of aid they’ll get, and they’ll notify the school when they’ve decided what loans they’d like to accept.

When students accept a loan, they’re asked to sign paperwork. A Master Promissory Note (MPN) is common, and students can work with that form online, using their FAS ID. Once students sign on, they’ll be taken to a form that they’ll sign electronically. Students are also required to complete a short online course about their loans, and they can access that module on the same website.

Need a private student loan? Compare your student loan options all in one place. SimpleTuition


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