Student Loans FAQ

How do I choose the right student loan for me?

picking a student loanYou have many options when it comes to student loans for higher education. A few things to keep in mind:

Fill out the Free Application for Federal Student Aid (or FAFSA). Without it, you won’t have access to federal student loans – many of which are not based on need or your income.

Always use federal loans first, such as the Perkins, Stafford, and PLUS loans. They carry lower, fixed interest rates and often have more favorable terms than private (or alternative) loans.

If you need to use private student loans, consider all of the costs. Private loans can have origination fees, different ways of compounding interest, and higher interest rates or APRs.

Know your credit score. The lower your score, the higher your rate will likely be on a private loan. Most student borrowers will need a credit-worthy co-signer to be approved for a private student loan. Most private loans have variable interest rates (meaning they will fluctuate over time), while government-backed (or federal) loans have fixed interest rates and more lenient repayment terms.

SimpleTuition pre-screens loans based on your search criteria. We have up-to-date pricing and eligibility information from lenders, which allows us to present the most relevant loan options to you in an apples-to-apples comparison.

We filter loans based on the loan amount, student’s school, degree program, and state of residence, and monitor any changes due to events in the lender and credit industry.

As the economy changes, lenders have tightened their lending criteria or even stopped lending altogether. Some lenders will not allow borrowing by students at certain schools because of the risk the student will default on the loan. Lenders often restrict the amount that they will loan, and some lenders are not licensed to lend in certain states.

What are my repayment options?

repaymentMost student loans have a few options for when you can start repayment. If you are enrolled more than half-time, you usually do not have to make payments on the loan while you are in school. If the loan is in just a parent’s (or guardian’s) name, you often do have to repay the loan taken out for your child, unless you are also in school yourself. After you leave your program or graduate, your loan may include a grace period of anywhere from 3 months to a year during which you do not have to make repayments. Depending on the type of loan, interest may or may not accrue during both the in-school and grace periods.

When you first take out a loan, your lender may let you choose from three types of repayment options:

When do I need to fill out the FAFSA? Is there a deadline?

FAFSAYou should fill out the FAFSA as soon as you can after January 1st of each year. Because the FAFSA asks for tax information from the previous calendar year, you may want to wait until your family has all of the necessary paperwork or has filed their income taxes. You can file the FAFSA before filing your income taxes using estimates, but you will need to go back later and correct any discrepancies.

The only deadline for filling out the FAFSA is June 30th at the end of the school year for which you are filing. In other words, for the 2013-2014 school year, the FAFSA will be available on January 1, 2013. You can file the FAFSA anytime between then and June 30, 2014. However, many states and schools allocate funds on a first-come, first-served basis, and some states have deadlines for filing the FAFSA to be eligible for certain kinds of aid. Please visit the Department of Education’s Student Aid on the Web for more information.

What happens if I cannot repay my loans?

Lenders will not forgive loans simply because the borrower could not find gainful employment or did not plan their budget well enough to include loan repayments. Generally speaking, a borrower has to have – and prove – mitigating circumstances in order to have their loan payments postponed or forgiven altogether. These instances are rare.

Two options that are sometimes available for postponing repayment of your student loans are deferment (when you can postpone repaying your loan principal and, in some cases, interest) and forbearance (when principal and/or interest payments may be suspended)

Note that neither deferment nor forbearance is a given. Still, if you are concerned that you will not be able to repay your loan, you should definitely contact your lender to inquire about the possibility of deferment or forbearance. Make sure to make this inquiry before you miss payments. In most cases, if you default on your loan, you are no longer eligible for a deferment or forbearance.

 

General Student Loan Topics

Borrowing Advice

Loan FAQs

Miscellaneous Financial Aid Topics