If you require money for your college costs, then you should know and also a have a good idea about your borrowing choices. Two of the most common ways of borrowing are federal student loans as well as private student loans. Read on to get more information.
What Are The Types Of Federal Student Loans?
There are 3 types of federal student loans such as:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
These federal student loans are accessible via the Federal Direct Loan Program. As the federal loans give different advantages over the private student loans, a student must always try to explore these loans first. So gain some more knowledge about these 3 types of federal student loans:
- Direct Subsidized Loans: These federal loans are for those students who have financial requirement that is determined by the federal regulations. No interest will be charged when the undergraduate student will be in school during half-time, deferment or grace period that is usually 6 months after a student leaves school or become a graduate, before he begins to pay principal as well as interest.
- Direct Unsubsidized Loans: These federal loans are never based on financial requirement. Your school will determine the loan amount that you will be able to borrow depending on the attendance cost as well as other financial help that you get. Interest will be charged throughout the entire duration and will get capitalized even if you are in school, during grace and deferment periods. This will increase your overall federal loan expense.
- Direct PLUS Loans: These are unsubsidized federal loans that are credit based for parents of the dependent students as well as graduate and professional students. PLUS loans will aid in paying for education cost till the attendance cost once your other financial help get exhausted. Interest will be charge throughout and will get capitalized too. It will be increasing your overall federal loan expense.
What Are The Types Of Private Student Loans?
If you have explored federal loans, scholarships as well as grants and still require money for your college, then you can look out for private student loans.
- It will be used by any financial institution such as a bank.
- Students take this private student loan. Their parents or any individual with a good credit become their co-signer.
- Private loans taken by parents are another method of getting money for college costs. A parent or guardian who is creditworthy can take a private loan to help their student in paying for his college.
How Can You Apply For A Student Loan?
There are many application processes that can be followed by a student on the basis of the type of loan they are in search of. The federal loan application process is:
- Fill out a Free Application for Federal Student Aid or FAFSA and submit it if you wish to apply for a federal student loan. You need to submit it so that you meet the eligibility for any federal student loan.
For submitting FAFSA for a federal student loan, there is a list of thing that you must remember.
- Become aware that there will be no cost when you will submit it. If you are asked to make payment, be sure that it is a fake website.
- Complete it each year when you require money for your college.
- Receive it as soon as possible. It is better if you receive it earlier as some grant amount gets awarded to students who apply and receive it first.
On the other hand as private student loans are provided by banks as well as other financial institutions, you will be able to apply to the lender directly. Follow the below mentioned instructions if you need to apply for a private student loan:
- Visit the website of a private loan provider.
- Check out the rate of interest of the loan, flexibility of payment options as well as other advantages.
- Directly apply on the lender’s website. You can select the type of repayment choice as well as rate of interest that you will want.
- You can add a co-signer if you want and it will improve your chance of getting an approval for your loan. But remember to select such a co-signer who has a good credit.
- The loan provider or money lender will be checking your and your co-signer’s (if you have one) credit report and will convey his decisions to you.
So when you will borrow money for your college cost it is essential that you do it responsibly. Consider what will be your salary after you graduate, be aware that you have to repay your loan as well as interest and never borrow more than you require for college expenses.