Student loans are typically extended to persons who pursue postgraduate or postsecondary degrees as to finance their studies. Students admitted to undergraduate programs can also apply for financing. They can either apply for government loans or apply with banks that offer student loans. On the average, the student debt stands at $20,000 for undergrads and few students can afford to pay their college expenses without any help. Depending on the institution and degree, some students may end up borrowing over $100,000, plus interest payments.
Being approved for a student loan is not always an easy task, but the application process is facilitated if the student has been admitted to college already. He or she may request information from the financial aid center of the respective institution. The officials there should be able to help and give information about the available options. In fact, close to 90 percent of the students go with the lending institution recommended by their university or college.
Many students who are going to attend graduate school are responsible for covering their food and housing costs. These expenses are often included in the tuition costs for undergraduate students. This should be kept in mind when applying for a loan. The possibility to receive a scholarship or grant is also a major consideration. Then, to determine the value of the loan, it is a good idea to come up with a budget of your expenses. These will include tuition, student accommodation, food, textbooks, medical supplies, and miscellaneous. If family members can contribute to meeting the education costs, this is the time to calculate how large the contribution will be. Another option is to join the military and look at their aid options.
It is recommended to borrow 125 percent of the difference between one’s education expenses and savings and income, which can be devoted to covering the tuition costs. Round this up to the nearest one thousand.
Then, it is important to choose the right loan. Think of a good combination of your tuition fee and the lowest possible rate. Ask potential lenders if you will be paying the same interest rate over the term of the loan. If you are applying for a variable rate loan, check if there is an upper limit. Another important question to ask is when you will be required to start paying off the student loan. What will happen with your loan if you decide to apply for graduate school after completing your undergraduate study?
Inquire about penalties in case you are late with your payments. Ask the lender if there are any options for reducing or deferring your payments if you are faced with an economic hardship. Last but not least, ask what the possibilities are in the event you are not able to meet your financial obligations.
In addition to bank loans, students can apply for federal aid. The Perkins and Stafford loans are the main loan options to look at. No-income and low income students are eligible for applying for the Stafford loans. Undergraduate, graduate, and vocational studies are funded under the program. Perkins loans are intended for low income students, and the interest rate is only 5 percent. To apply for federal loans, students have to fill out the FAFSA application form and attach documentation proving their income.