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The First Step Is Obtaining The Loan

When we discuss the ‘pain’ that comes with student loans, there are two different types of associated pain. We will start with the confusing pain of going through the many steps to help you improve your chances of earning an affordable degree.

In January, high school seniors will receive those fat letters that will need to be filled out to abide by government rules. The Department of Education’s claim that it takes only about an hour to fill out the 124-question Free Application for Federal Student Aid is not the total truth. Expect to spend at least a couple of hours.

In fact, all of the paper work you will be filling out will be more than double the time that is stated on the forms. All students, wealthy or poor must fill out different forms for some college merit scholarships as well as the federal government’s Stafford program, which offers reasonably, priced loans regardless of need.

It is best to fill out the FAFSA in early January using estimates on previous year’s taxes. The FAFSA misses many legitimate expenses that can reduce a family’s ability to pay tuition. If you have any question, and feel the FAFSA does not describe your financial situation, add a letter of explanation with the application.

The feeling of financial frustration ratchets up in spring. Letters start to arrive from competing schools and they use different wording to make their awards sound more appealing. Some schools offer merit scholarships with hidden strings (like unrealistically high grade-point minimums) that make it unlikely the student will be able to renew for next year.

Keep in mind it is mostly time consuming and a lot of necessary reading and rereading for all of the small important print. To help with the pain, stay on top of the paperwork and when you have questions, call the school counselor or names/numbers on the multi forms for answers or ask to be referred to someone. Don’t put any of this off.

The Second Step Is Repaying The Loan

Repaying the loan usually is not as difficult as obtaining one, unless you make it so. It is like any other bill or loan with the exception of dates, time limits and small penalties growing to large penalties, if not met.

Students must begin repaying the loan after their grace period ends, after graduation, if they withdraw from school, or drop below half-time status in school. The length of the grace period depends on the type of the loan they have borrowed.

The lenders should contact the student during the grace period with information about the repayment process. However, if they do not, that is not a reason for postponement for repaying the loan. The responsibility for repayment rests on the borrower.

The payment plan will automatically be set on a schedule. The borrower is expected to make the payment on time, each month. Making late payments, or missing payments, can cause borrowers loans to go into default. This can lead to payments being automatically withdrawn from their tax refunds or paychecks.

After the default process begins and the borrower fails to make payments for 270 days (9 months), the entire loan balance is due in full.

To avoid student loan agony, start early, stay on top of all paperwork and have all of your questions answered. Then, make sure to repay the loan on time, each month.

A Federal Perkins Loan Program is a long-term loan with a low interest of 5 percent to students with exceptional financial need. The school determines which students have the greatest need. The loan is for both undergraduate and graduate students.

Under the program, this type of loan is made through a school’s financial aid office. The school acts as the lender, and the loan is made with government funds. The U.S. Department of Education provides a programmed amount of funding to the school and the school adds some of its own funds for the loans. In order to apply for this program, you must fill out and submit the Free Application for Federal Student Aid (FAFSA).

You also must meet the following requirements:

• Enrollment in an eligible school at least half-time in a degree program

• U.S. citizenship, permanent residency, or eligible non-citizen status

• Satisfactory academic progress

• No unresolved defaults or overpayments owed on Title IV education loans and grants

• Satisfaction of all Selective Service requirements

If you are an undergraduate student, you may borrow up to $4,000 a year with a total maximum of $20,000 borrowed during your undergraduate years. If you are a graduate student or in your professional studies, you may borrow up to $6,000 a year and a total amount of $40,00 borrowed in both undergraduate and graduate schools.

The actual amount that you will receive depends upon your financial need and the school’s level of funding. It is best to check with your school to find out more in that area.

You will receive your loan through your school. The school will either give you a check or credit your personal student account. Most likely the loan will be divided into two payments, unless the loan is for a very small amount.

Unlike other federal student loans, Perkins loan borrowers do not have to pay origination or insurance fees. Perkins loans share many same characteristics of the Stafford loans. However, the two mains differences are no fees and a longer grace period.

Payments on your Perkins loan begin nine months after you graduate or leave school. If you serve in the military, repayment assistance may be available. How much you pay back each month will depend on how much you borrowed and how long you have to repay your loan.

You may be allowed up to ten years to repay the loan in full. Under certain circumstances you can receive a deferment on your loan. During a deferment, no payment is required and interest does not accrue.

A Perkins loan can also be canceled under certain circumstances, such as your death or a total and permanent disability. You also might qualify for having your loan canceled because of the type of work you have chosen once you leave school.

There are often several unanswered questions such as: Can I postpone my loan payment by receiving a deferment of what type, what will be the exact amount of my monthly repayment bill, what if I need to stop school for awhile due to family issues, etc.? Check with your college or career school you plan to attend for their personal answers.

First of all, financial assistance programs and requirements often vary from school to school regarding educational loans. Always check with your school that you are planning to attend before applying for financial aid.

There have even been two more grants made available as of the 2006-07 school year for college students who graduated from high school after January 1, 2006 and for the second year college students who have graduated from high school after January 1, 2005.

There are ways to make your education affordable. The Department’s Federal student aid programs are the largest source of student aid in American. If you are in financial aid for college or a career school, you have come to the correct place. These programs give more than $80 billion a year in grant, loans, and work-study assistance.

You need to read to find out more and to find out how to apply for this type of aid. The U.S. Department of Education student aid is the largest but not the only source you can find out about of federal aid and about scholarships. Non-federal financial assistance programs often vary, so check with your school for information about your state and their aid.

The form for applying for financial aid is the same form for applying for financial aid used for all two or four year colleges, universities and career schools for awarding of federal student aid and most state and college aid. And that form is the Federal Student Aid Form (FAFSA).

If you are eligible after you have filled the FAFSA form, the office has a variety of programs to aid you with in paying for your education after high school. However, if you decide to take out a federal student loan for school you are taking on serious obligations. Find out what they are and how to maintain your account in good standing.

Another thing you need to do is to investigate your financial aid options with a step-by-step process for calculating your cost. Also, with good grades you can be awarded scholarships and loans available to you.

If you want to go to college in the future, you cannot guess what you might be given, but you can find out what you would get if you applied this coming year. Use that as a guide as you prepare for the time you enter college.

When you are in college, the harder you work and the higher your GPA the more likely you will obtain a scholarship or grant, or whatever your specific school gives to students in that case. All students are awarded for their hard word and achievements.

The best thing I can say to you, the higher you GPA, (especially), your extra curriculum activities, etc., the more your school will court and want you and give to you to keep you there at their school.  Remember that you can always apply for a student loan as long as you are in school. And that can be for two years, four years, six years, eight years, etc.

Also, you have a few things on your side to remember. First, it is an investment to all if you are more intelligent and hold down a solid job in society. And no matter what financial institution you go with, they will be more than happy to work with you to take a portion of your money.

The answer is yes. However, it will take time and work on your part. There is financial aid out there. Many programs have been established to help people who truly want an education and yet cannot afford it.

First, let’s understand why it is helpful to obtain a cosigner if anyway possible. All student loans consist of the same two components; principal is the amount that you ask to borrow and the interest is the amount you will be charged for lending you the money.

With a cosigner your options multiply in the amount you are able to borrow and the interest rate at which the lender will be able to offer you on your loan. Also, you most likely would have additional choices for loans.

Life is not always as we want it to be and if there is a situation for you where just no one would or could cosign for you, do not become discouraged. It is definitely possible to get student loans without a cosigner. In fact, it probably takes place more often than you might think.

Federal Student Aid is a program, which helps students with loans and grants so that anyone who wants to get an education may do so financially. This aid would also help students with poor credit who might not be eligible to get a loan otherwise, as well as those who depend upon themselves financially.

Therefore, federal student loans and state-sponsored student loans do not require credit checks nor cosigners. Usually there are several factors that would be considered for eligibility, but federal student loans can be obtained almost by anyone.

Another type of aid that you may look into being eligible for are certain loans and grants that are specifically held for the most financially needy of applicants. The Federal Stafford Subsidized Loan, the Pell Grant Loan and the Federal Perkins Loan are wonderful examples of such aid

If you desire to apply for all of the forms of government-funded financial aid for which you might be eligible for, you should then fill out the Free Application for Federal Student Aid (FAFSA). I would suggest going for everything possible.

Another area of consideration is the Gift Aid. This is a financial aid that requires no repayment on your part, including scholarships and grants from private and federal loans. Gift Aid does not require a cosigner. Scholarships and grants may be given to students for merit or financial need.

Private Student Loans come from private sources, such as credit unions or banks. And usually they do require a cosigner. However, if you have very good credit, and accept a high interest rate assigned to your loan, you many be able to obtain one without a cosigner. It’s truly not the number one choice, yet a choice, if your credit is good.

And the last suggestion, and not meaning the worst, is to start checking the web. In the first paragraph I said that you would need to spend time and work to find enough financial aid needed without a cosigner. And you may need more than one loan.

There are financial aid companies on the web assuring to help out students. You need to study, read and check out all of their details and requirements. I have just finished reading a few and they were somewhat impressive.

There are two different kinds of Stafford Loans and both are administered by the U.S. Department of Education. The first is called the Federal Family Education Loan (FFEL) Program and the other one is called the William D. Ford Federal Direct Loan (Direct Loan) Program.

For either type of loan the terms and conditions are very similar. And the amount that you choose to borrow can be the same from the Direct Loan or the FFEL lender.

For either type of Stafford Loan application, you fill out a Federal Student Aid Application (FAFSA). Then you present it to your school for a review. After it is processed they will inform you about your results and loan eligibility.

If you are accepted for one of the loans you will be asked to sign a promissory note that lists the conditions under which you are borrowing the money and the terms under which you agree to repay the money.

For both of the Stafford Loans you will be paid through your school in two installments. No installment will exceed one-half of your loan amount. The money first must be applied for tuition and fees, (room and board in some cases) and other mandatory school charges.

If any money is left over, you will receive the money, usually by check, to do as you wish unless you have given the school written authorization to hold the extra money until later in the enrollment period or next enrollment.

Here is where the two loans start to differ. First, if you choose a Direct Stafford Loan, the money will be coming from the federal government. And repayment will be made to the U.S. Department of Education.

If you go with FFEL Stafford Loan you will need to choose a lender. Your school will have a list of borrowers that you can choose from or you may have your own source such as your personal bank or credit union.

Also, there can be a difference between the loans when it comes to repayment. You have a choice of repayment plans for either loan. Your monthly payment will depend on the size of your debt and the length of your repayment period.

Before considering any loan it would be best to purchase the booklet or ask your loan provider for a copy of: Funding Education Beyond High School: The Guide to Federal Student Aid.

This guide explains repayment options, examples of monthly payment for different loan amounts and combining Stafford Loans with other available loans. It covers many areas you need to know when trying to manage your coming expenses.

Once you have graduated or leave school or drop your enrollment below half-time you will be given a six-month grace period before you have to start repayment on your loans. During this time you will receive information regarding your first payment due date.

You will receive all the information you need regarding repayment plans during your initial session when you apply for you loan. This can be either through your school counselor, bank representative or institution you go through to obtain your loan.