Things You Need to Know Before Applying For a Student Loan

 Things You Need to Know Before Applying For a Student Loan

Things You Need to Know Before Applying For a Student Loan
Different from Scholarships, an education or student loan is a way of financial aid that has to be repaid. As any other loan, it includes interest. If you are a full-time student and academic costs overpass your economical possibilities, you may have already wondered whether if you are eligible for a Student Loan.
There are different kinds of Student Loans with different requirements to be fulfilled, amounts to be borrowed and repayment options. Take a few minutes to read about them and decide which kind of loan suits best with your economical needs.
Types Of Student Loans
There are two main categories into we can divide Student Loans. Those categories are, Federal Loans and Private Loans. Federal Loans depend on the Federal Government and private loans are offered by private financial institutions.
Federal Student Loans
As we said, Federal Student Loans funds, depend on the Federal Government. The funds of these loans are meant to cover educational needs, like tuition and college fees. These loans are never lent directly to the student. Funds are given to the college or to the parents if you applied for a PLUS loan. PLUS loans or Parent Loan for Undergraduate Students are made in the name of a parent and they receive the funds to be destinated to the student’s education.
Federal student loans have established maximums to be borrowed and they depend on which year of the education the student is, and the costs of attendance set by the school. You can not borrow more than your cost of attendance and you have to discount any other financial aid you are receiving. This means that frequently students can borrow less money than they need to cover their academic expenses in full.
To apply for a Federal student loan, first you have to fill the Free Application for Federal Student Aid. This form is used for any application to federal student aids. You will also need to sign a promissory note, in which you take the legal compromise of repaying the loan.
In case of a Stafford loan, you may be eligible for a subsidized loan, in which the government pays your loan’s interests while you are in school, or an Unsubsidized Stafford loan in which you are in charge of making interest-only payments on your loan while you are attending school or deferring the interest, this means you allow the interest to be added to your loan principal.
Depending on the designed lender, repayment of Federal student loans start within the next six months of your graduation, switching to part-time assistance or abandoning school.
Private Student Loans
You may consider to borrow the money for your education directly from a private lender or, take a private student loan as a second source of money, if a Federal student loan does not cover in full your economical needs.
As any other private loan, like a car loan, private student loans are based on your credit score. If you have a good record, you will not find any problem to be approved. If your credit score is not so good, or you still do not have started a credit history, you may need a co-signer in order to apply for your loan.
Different from what happens on Federal loans, the funds of private student loans are given directly to the student.
Conditions of private student loans vary according to different lenders. Make sure to find and compare different options before choosing a lender.
A Few Things To Have In Mind Before Applying For A Student Loan
Try to borrow only what you need, and make sure you know all the terms and conditions implied before giving your agreement for the loan. And keep in mind that whether if you apply for a Federal or a private student loan, sooner or later, depending on the loan, you will have to accomplish with that you have agreed to. Student loans also contribute to your credit score, so be responsible with your decisions.