How Can I Get a Student Loan?
3 min read
No matter whether it is federal or private loans, always take the time to review your options carefully and understand their long-term commitment. Both loans and grants must be repaid with interest payments.
Start with federal loans, which typically are less costly and offer flexible protections like income-driven repayment plans and loan forgiveness options. Private loans generally require credit checks as well as cosigners.
Cost of Attendance
Cost of attendance” may seem like an innocuous term, but it plays an essential part in how college students receive financial aid. It helps determine the maximum amount a student is eligible to receive by subtracting expected family contribution (EFC), calculated from data available through Free Application for Federal Student Aid (FAFSA).
The Cost of Attendance (COA) covers expenses such as tuition and fees, room and board, food and meals, books, supplies and transportation costs. Each school determines their own estimated annual costs on their websites and publishes these estimates annually.
If your actual expenses exceed what your school estimates, they may increase your aid package. Some ways of cutting costs include finding cheaper accommodations (maybe off campus), taking public transit instead of driving yourself, or purchasing used textbooks or digital editions of them.
Financial Need
Financial need plays a pivotal role in the award of student loans, and is determined by your family’s Expected Family Contribution (EFC) and data from the FAFSA form.
To demonstrate financial need, it’s important to include any efforts your family has taken toward saving for college – this might include summer jobs, work-study programs or expected contributions from parents. You should also mention any merit-based grants or scholarships you might be receiving.
If your EFC exceeds need-based financial aid requirements, private student loans may be the perfect solution. Be sure to compare lenders, rates, offers and pre-qualify tool on WalletHub carefully; personal loans don’t just fund tuition costs but may help cover other related costs like class equipment rental fees, housing and living costs.
Credit History
Student loans are installment loans similar to auto and mortgage loans that appear on your credit report. Student loans may have either positive or negative ramifications on your score depending on how easily or poorly they’re repaid as well as other factors like payment history and your debt-to-income ratio.
Private lenders usually use your credit score as one factor when determining eligibility and terms for their loans, and may even require you to have an individual with good credit serve as cosigner should any default occur on the debt incurred from said loan.
Private lenders divide credit scores into tiers, with those in the highest tier receiving the lowest interest rates. The levels are determined by likelihood of nonpayment; higher scores equate to lower margins; thus making it important to maintain your score as high as possible – missed payments can impact it adversely as well.
Educational Goals
Every student should set educational goals for themselves this year. These could be short- or long-term, and should help the student on their academic journey by studying, creating a schedule, communicating with instructors and enrolling in classes of interest. Furthermore, having a support network that encourages and helps attain these educational objectives can only assist further in reaching goals more efficiently.
Debt should always be avoided where possible. With savings, frugal living, and working, most students can pay for college without needing loans; however if this becomes necessary then it should first be exhausted through scholarships and grants before resorting to loans as an option.
As part of the application process for student loans, filling out a FAFSA form should be the initial step. This will give both students and their families an estimate of how much money is available for school borrowing purposes. Next step should be researching both private and federal loans – private loans typically come with higher interest rates that require co-signers while federal loans come with fixed rates without application fees attached.
