By: Mevish Jaffer
Getting ready to start college takes a lot of preparation on your part; this includes understanding the student loan borrowing process and how it works to help finance your education. First of all, you have to know that there are several different types of student loans that are available for you as a college student. All of them boast varying benefits, terms and conditions. You can start educating yourself on the various types of student loans out there by engaging in a little research. Depending on your individual financial situation, you should be able to find some loans that work for you.
Where It All Begins
Before you can even be considered or eligible for any type of college loan, you have to first fill out the Free Application for Federal Student Aid or FAFSA form. This form is essentially the first piece of information that is needed during the student loan borrowing process. If you go to your college’s financial aid office, they should be able to provide you with the FAFSA form and answer any questions you may have about filling it out. You can also obtain it online and submit all of your information through the Internet, which is a significantly quicker way to get through the process.
After you have submitted your FAFSA and it’s been processed, you will then receive an SAR, or Student Aid Report. The purpose of this report is to show the amount of money you or your family is eligible for as well as the approximate amount of funds that will be contributed towards the cost of your tuition. Qualifying for grants or other types of private funding is generally determined by your school or university. Once you know what you are and are not eligible for, you can determine how much you will need to borrow from loan lenders.
Types of Student Loans You Can Consider
College loans can be broken down into four different groups. These include:
- Student loans (Stafford and Perkins)
- Loans for parents (PLUS)
- Private student loans
- Consolidation loans
If you’re wondering which loan would work best for you, then you have to assess your individual situation in order to determine the right choice. The Stafford and Perkins loans are two popular student loans that most college students find easy to qualify for. Both these loans are available to undergraduate and graduate students who are attending college on a full or part-time basis. An added benefit to these loans is that you don’t have to have an established credit history (which most young students tend to lack) in order to be eligible. As a struggling student, you will probably also appreciate the low interest rates that the Perkins loan offers. The subsidized rates that the Stafford loan offers can also be beneficial for you.
If you aren’t able to obtain any grants or scholarships, don’t get discouraged because a parent may still be able to apply for the Parent Loan for Undergraduate Students or PLUS loan. What this loan essentially does is allow a parent to borrow the funds necessary to finance their child’s college education. However, there are a couple important points to keep in mind with a PLUS loan. Repayment of the loans starts only 60 days after taking it out and the interest rates attached are not subsidized.
Another option you also have is the Sallie Mae student loan. If you’re not familiar, Sallie Mae is a financial institution that oversees Federal student loans. Sallie Mae is known for offering students a combination of college loan options that can meet their needs all in one place. Student loan consolidation is also worth considering as it allows you to lump all of your loans into one single payment and also helps to eliminate higher interest rates.
Getting a college education is extremely important, however more often than not many people have to side step it due to financial constraints. Remember that the loans mentioned above are truly meant for aspiring students, who want to make something more of themselves by attending an institute of higher learning. As the saying goes, “a mind is a terrible thing to waste,” and you don’t have to anymore!
