How can I get a student loan? It has been one of the frequently asked questions over the years. And it can be your concern too if you are planning for higher education.
A good career is built on a foundation of education. With the rising tuition fees, many families have to secure a student loan for their child. Thus, to help you avoid any financial burden, we have prepared this guide explaining how to apply for a student loan.
While scholarships and grants can save from graduate school’s high costs, student loans suffice all your other needs. But what is the right time to apply and get a student loan? The answer is before you start school.
An early application is always a plus point for borrowing an education loan. It takes weeks to process a loan application, so apply as early as possible. And if you are planning to borrow federal loans, start by submitting your FAFSA (Free Application for Federal Student Aid) application.
Here’s Is A Step By Step Guide To Help You Understand How To Get A Student Loan:
Make an Estimate of the Costs of Attendance:
Have an idea of how much your grad school may cost. You should consider every school-related costs while making it. Determine tuition fee costs, living expenses, transportation, books cost, and other expenses in this estimate. Once the cost is decided, subtract other financial aid you are getting to know the amount you require.
Compare All the Options
Once you have the idea about the total required cost, there are three main sources to get a student loan:
Federal Direct Loans
The annual borrowing limit under the federal student loan scheme is $20,500. Your school’s financial aid office determines the exact borrowing amount as they also put a limit to the amount on the basis of student’s need.
One good thing about this loan is you don’t need to have a good credit score as there is no credit check for this loan. These loans have a fixed interest rate of 4.30% for the loans disbursed between the following dates July 1, 2020, and July 1, 2021.
There are multiple repayment options on federal loans, but you must not repay the loan while attending school. As you complete your degree, you have repayment terms like income-driven repayment plans, graduated repayment, and a standard 10-year repayment plan.
Grad PLUS Loans
The maximum amount will be determined after subtracting the other financial aid you’ve gained from the total cost of attendance. To qualify for Grad PLUS Loans, you need a credit score. If credit score alone can not qualify your application, you may need help from an endorser.
For the loans disbursed between July 1, 2020, and July 1, 2021, there is a fixed interest rate of 5.30%. Like the federal loans, you are not obligated to repayment while attending the school. Students can repay with graduated repayment terms, a standard 10-year repayment plan, and income-driven repayment plans.
There is no certain limit on getting private loans as it may vary from lenders to lenders. Usually, lenders follow the same method as Grad PLUS Loans for deciding the maximum loan amount. To meet the eligibility criteria, you need a credit history or income source.
And still, if you can’t qualify for private loans, you may need a cosigner. As these lenders are private organizations or people, the interest rates and in-school or after-school repayment terms are not fixed and vary from lender to lender.
You can use this data to compare the three loan options and choose the best for you. Consider two things while deciding which loan costs the least over time and the loan that offers the best borrower protection.
Send Your Application
For applying for federal loans, it is mandatory to submit a FAFSA. It is the most crucial step for your eligibility for the loan. The next session’s application process, the 2021-22 academic year, will begin in October.
You will find many lenders for private loans. Apply in different institutions to compare the terms and conditions to get the best loan. You can check out plans of online lenders, local and national banks, and credit unions.
Now, as you have this information at your fingertips, get ready to apply to your dream grad school with student loans.