Apply For Student Loans

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.

Student Loans General Information

Student Loans

Many students rely on federal government loans to finance their educations. These loans have low interest rates and do not require credit checks or collateral. Student loans also provide a variety of deferment options and extended repayment terms.
Student loans include the Federal Stafford and Federal Perkins Loans.

Stafford Loan

The main federal loan for students is called the Stafford Loan and has two variations:

• Federal Family Education Loan Program (FFELP) loans are provided by private lenders, such as banks, credit unions and savings & loan associations.
  These loans are guaranteed against default by the federal government.
• Federal Direct Student Loan Program (FDSLP) loans or "Direct Loans", administered by "Direct Lending Schools", are provided by the US government directly to students and their parents.

All Stafford Loans are either subsidized (the government pays  the interest while you're in school) or unsubsidized (you pay all the interest, although you can have the payments deferred until after graduation). To receive a subsidized Stafford Loan, you must be able to demonstrate financial need. About 2/3 of subsidized Stafford loans are awarded to students with family AGI of under $50,000, 1/4 to students with family AGI of $50,000 to $100,000, and a little less than 10% to students with family AGI over $100,000.

With the unsubsidized Stafford loan, you can defer the payments until after graduation by capitalizing the interest. This adds the interest payments to the loan balance, increasing the size and cost of the loan. All students, regardless of need, are eligible for the unsubsidized Stafford Loan.

Repayment begins six months after the student graduates or drops below  half-time enrollment. The standard repayment term is 10 years, although one can get access to alternate repayment terms (extended,  graduated and income contingent repayment) by consolidating the loans.

Stafford Loan Limits

The following chart illustrates the annual and aggregate loan limits for the subsidized and unsubsidized Stafford loans first disbursed on or after July 1, 2008.

The limits may be a little confusing because there are two sets of limits for the Stafford loan: a combined base limit for the subsidized and unsubsidized Stafford loan, and an additional limit for just the unsubsidized Stafford loan. In effect, the subsidized Stafford loan is limited to the amounts in the "Combined Base Limit" column and the
unsubsidized Stafford loan is limited to the amounts in the "Total Limit" column minus the amount of any subsidized Stafford loans.


Many students combine subsidized loans with unsubsidized loans to borrow the
maximum amount permitted each year.


Note also that there are separate limits for dependent undergraduate  students, independent undergraduate students, graduate and professional students, and medical school students.  Dependent undergraduate students whose parents have been denied a Parent PLUS loan are eligible for the higher unsubsidized Stafford loan limits available to independent undergraduate students.

Annual Loan Limits - Stafford Loan
Dependent Students (whose parents were not denied a PLUS loan)	Combined Base Limit for Subsidized and Unsubsidized Loans	Additional Limit for Unsubsidized Loans	Total Limit for Unsubsidized Loans (minus subsidized amounts)
First-Year Undergraduate (Freshman)	$3,500	$2,000	$5,500
Second-Year Undergraduate (Sophomore)	$4,500	$2,000	$6,500
Third-Year and Beyond Undergraduate (Junior, Senior)	$5,500	$2,000	$7,500
Preparatory Coursework (for enrollment in an undergraduate program)	$2,625	$0	$2,625
Preparatory Coursework (for enrollment in a graduate or professional program)	$5,500	$0	$5,500
Teacher Certification Coursework	$5,500	$0	$5,500
Independent Students (and dependent students whose parents were denied a PLUS loan)	Combined Base Limit for Subsidized and Unsubsidized Loans	Additional Limit for Unsubsidized Loans	Total Limit for Unsubsidized Loans (minus subsidized amounts)
First-Year Undergraduate (Freshman)	$3,500	$6,000	$9,500
Second-Year Undergraduate (Sophomore)	$4,500	$6,000	$10,500
Third-Year and Beyond Undergraduate (Junior, Senior)	$5,500	$7,000	$12,500
Preparatory Coursework (for enrollment in an undergraduate program)	$2,625	$6,000	$8,625
Preparatory Coursework (for enrollment in a graduate or professional program)	$5,500	$7,000	$12,500
Teacher Certification Coursework	$5,500	$7,000	$12,500
Graduate and Professional Students	Combined Base Limit for Subsidized and Unsubsidized Loans	Additional Limit for Unsubsidized Loans	Total Limit for Unsubsidized Loans (minus subsidized amounts)
Graduate and Professional Students	$8,500	$12,000	$20,500
Medical School Students	$8,500	$32,000	$40,500

Aggregate Loan Limits - Stafford Loan
	Combined Base Limit for Subsidized and Unsubsidized Loans	Additional Limit for Unsubsidized Loans	Total Limit for Unsubsidized Loans (minus subsidized amounts)
Dependent Undergraduate Students (whose parents were not denied a PLUS loan)	$23,000	$8,000	$31,000
Independent Undergraduate Students (and dependent students whose parents were denied a PLUS loan)	$23,000	$34,500	$57,500
Graduate and Professional Students	$65,500 (including undergraduate Stafford loans)	$73,000	$138,500
Medical School Students (Effective 4/18/08 per DCL GEN-08-04)	$65,500 (including undergraduate Stafford loans)	$158,500	$224,000

Stafford Loan Interest Rates and Fees

Stafford Loans have a fixed interest rate of 6.8% for loans with a  first disbursement after July 1, 2006. (Previously, Stafford Loans had variable interest rates (based on 91-day T-bill  rate + 1.7% during school with an additional 0.6% increase upon graduation) capped at 8.25% or less, depending on yearly adjustments.) All lenders offer the same rate for the Stafford Loan, although some give discounts for on-time and electronic payment.

The College Cost Reduction and Access Act of 2007 reduced the interest rates on subsidized Stafford loans for undergraduate students  starting July 1, 2008. These reductions are available only to undergraduate students, not graduate students, and only for subsidized Stafford loans, not unsubsidized Stafford loans. The interest rates
are illustrated in the following table.

Phased-in Cuts in Interest Rates on Subsidized Stafford Loans for Undergraduate Students
Year	Interest Rate Subsidized Stafford Loans (Undergraduate Students)	Interest Rate Other Stafford Loans (Graduate or Unsubsidized)
2007-08	6.8%	6.8%
2008-09	6.0%	6.8%
2009-10	5.6%	6.8%
2010-11	4.5%	6.8%
2011-12	3.4%	6.8%
2012-13	6.8%	6.8%

Stafford Loans have loan fees of 4%, which are deducted from the disbursement check. These fees consist of a 3% origination fee and a 1% default fee (previously "guarantee fee"). Starting July 1, 2006, the default fee will be
mandatory. (Previously, guarantee agencies could waive the fee and many did.) The origination fee will drop from 3% to 2% on July 1, 2006, and will drop by a further 0.5% each successive July 1, until  it is phased out entirely on July 1, 2010.

Applying for a Stafford Loan

To apply for a Stafford Loan, you must submit the Free Application for Federal Student Aid (FAFSA). Even though the unsubsidized Stafford Loan is available to all students regardless of financial need, you must still submit
the FAFSA to be eligible. You can receive a subsidized loan and an unsubsidized loan for the same period.
 
You may use the Lender Codes Database to obtain the lender codes of participating student loan providers.
FinAid also maintains a list of education lenders who offer federal and private student loans.
If you are a student attending a school that participates in the Federal Direct Student Loan Program you will obtain your federal student loan funds directly from the U.S. government, not from private lenders.

Perkins Loan

The Perkins Loan is awarded to undergraduate and graduate students with exceptional financial need. This is a campus-based loan program,with the school acting as the lender using a limited pool of funds provided by the federal government. (The Perkins Loan is the best student loan available. It is a subsidized loan, with the interest being paid by the federal government during the in-school and 9-month grace periods. There are no origination or default fees,and the interest rate is 5%. There is a 10-year repayment period.

The amount of Perkins Loan you receive is determined by your school's financial aid office. The program limits are $5,500 per year for undergraduate students and $8,000 per year for graduate students, with cumulative limits of $27,500 for undergraduate loans and $60,000 for undergraduate and graduate loans combined.

The Perkins Loan also offers better cancellation provisions than the Stafford or PLUS loans.

Other Student Loans

If your borrowing needs are not met by the federal programs, lenders offer a variety of supplemental borrowing programs known as Private or Alternative Loans.


Parents of undergraduate students can borrow parent loans such as the PLUS Loan to pay for their children's education.
Starting on July 1, 2006, graduate and professional students will also be able to borrow money through the PLUS Loan program to pay for their own education.