If you going to apply for student loans anytime soon, you may be wondering where to start as well as the best way to go about this search, as this funding will be vital for obtaining a college degree. Considering this, we have some great tips for you to follow that will allow you get on the right track when it comes to applying for student loans.
Apply For Student Loans That Are Federal
There are two types of loans, federal and private, both of which serve their place on the quest for college money. Federal loans, those lended either directly or indirectly from the governement should always be applied for first as:
- Interest percentages are much lower.
- They have more flexible repayment plans, like the Income Based Repayment (IBR), which allows the borrower to have a monthly payment which equates to around 10 to 15 percent of their monthly income.
These federal student loans come in the form of three different types which are; Stafford Loans, Perkins Loans and PLUS loans, which some of them have the subsidized option, which is where your eligibility is based soley off financial need, as well as unsubsidized, which eligiblity is not based of financial need.
In order to apply for student loans that are federal, all applicants must fill out a Free Application for Federal Student Aid also known as a FAFSA, which will determine, through the Ecpected Family Contribution (EFC) section, how much money the student will be eligible for in the form of federal loans. Besides being able to find out how much money is going to be made available in the form of federal student loans through FAFSA, the applicant will also be able to find out information on other forms of financial aid like;
- Federal grants, like the Pell Grant which offers students up to 5,550 dollars per year, which doesnt have to be paid back, among others.
- Work study programs
Apply For Student Loans That Are Private
Private student loans should be your last resort when you set out to apply for student loans. These loans are made availabe through private lenders like banks and institutions among others, which are there to provide you with the ammount of money that federal loans as well as any other financial aid you are receiving, didn’t cover. In order to get the best private student loans, a couple tips that are good to follow are;
- Either have good credit, or find a co-signer who does, which a co-signer can be anyone from a parent to a friend. To make your chances of eligiblity the best for private student loans, do your best to get a credit score that is higher than 700. This will avoid rejection of your application as well as come with lower interest rates and other fees.
- Applying for student loans that are private come with two different types of interest, both LIBOR and PRIME. The best private student loans come with rates that are; LIBOR 2.0% and PRIME .50%.
- Find loans that come with no “activation” or “origination” fees, both meaning the same, which is the fee for taking out a loan.
