Be it an undergraduate loan or a graduate loan, you need to be very careful when deciding on the loan amount to be applied for, and the banks or private organizations whom you may take the loan from. A majority of students count on student loans for gaining admission to a college or university and completing a degree. Approximately, 90% of the students opt for loans from lending institutions which are recommended by their respective universities. However, this may not be the best option, as there is a possibility of the universities receiving a kickback from these lenders. When it comes to student loans, you need to make wise and well-informed decisions, as these loans are huge sums and repayment is a serious matter.
Assessing the Aggregate Expenses
The first thing you need to know before applying for a student loan is how much amount you have and how much more would you need to borrow. Along with the tuition fee, you would also have to consider the food and living costs. Take time and make a note of all the possible expenses such as medicines, supplies, travel, etc. Many a time, it happens that you come to a certain amount, and the total expenses turn out to be much more than what was estimated.
Types of Available Loans
Generally, there are two types of student loans: federal loans and loans provided by private institutions. Most people prefer federal loans, as they are subsidized by the government. These loans require the interest to be paid after graduation, and that too at a lower rate. Federal loans include the Stafford loan, Perkins loan, and Parent Loan for Undergraduate Students (PLUS). Furthermore, there are again two types in Stafford loans; ones which are funded through a private lender, normally a bank or a credit house, which are known as FFELP loans; and the others which are funded directly through the US government, known as direct loans.
You can even consider obtaining an education loan from a private institution, but you need to be careful about the reputation of such lenders. Students qualify for private loans largely based on credit score. However, a majority of people do not prefer private loans as their interest rates are higher than the federal loans. In case of such loans, do a thorough research on all the terms and conditions regarding the payback, post course completion. Your university may also guide you in searching for a reputed and suitable private lender. You can even obtain information regarding a suitable private loan from students who have availed such loans and paid them back without any hassles.
Searching for the Appropriate Loan
You should carefully decide where you would take the loan from. Take out time and find out all the banks, financial houses, and reputed private lenders who have been in the lending business for a considerable period of time. After you have made an elaborated list of all types of lenders, approach every one of them and acquire as much information as you can regarding the lowest interest rates, when you are required to start the repayment, if the interest rates are variable, and all the other aspects related to a student loan. After determining which is the most suitable and affordable loan, you can complete all the required formalities.
If not paid in the allotted time, the government may withhold a portion of social security retirement benefits and disability benefits. Furthermore, a default is added to the records for 7 years.
There are many federal and private entities that can help you get a student loan these days. Take all considerations into account and choose wisely.