How To Apply For Private & Federal Student Loans

Published on: Sun, Dec 20, 2009

Though the student loan application process is confusing but that’s the requirement for all students.

There will be only few students who can afford college without federal student loans and private loans.

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The Free Application For Student Aid (FAFSA)

The federal Loan application FAFSA is having a long and confusing form and there is no other alternative application form that you fill out and still get federal student loans.

Anyhow help can be provided to students and parent for filling out the FAFSA.

The FAFSA can help you to qualify for federal grants like work study programs and federal loans. For different reasons millions of students unfortunately fails to complete the FAFSA. As a matter of fact failing to complete FAFSA means missing easiest college money to come by.

How to Complete the FAFSA

The FAFSA is available in an online version, which you can download and print off, or you can send for a hard copy of the application. But majority of students mostly choose to file with online version. Before completing the FAFSA it’s required to apply for a Personal Identification Number (PIN) from which you can create a virtual account.

FAFSA deadlines are hard and fast. But every state is having its own FAFSA deadlines.

FAFSA is usually a requirement for all types of scholarships, grants, and loan programs outside the federal realm, another reason to make sure you get it done.

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It will be better for you to contact your high school guidance counselor or college admissions advisor for FAFSA assistance.

The Student Aid Report (SAR)

The federal government determines what types of programs you qualify on the basis of household income information on your FAFSA. This information is reported to you in the Student Aid Report (SAR).

The SAR is having information about:

EFC or Expected Family Contribution means that how much you or your family are expected to contribute in your education.
And what kind of financial aid you qualified for like subsidized or unsubsidized Stafford Loan, Perkins Loan, and Pell Grant.

The schools that you indicated on your FAFSA will receive the SAR copies. If they agree to accept you as a student then they will create a financial aid package to offer you and it will be sent to you in an award letter. Once you decide which school to attend, then you choose lenders for your federal student loans.

You can choose any lender, which you want the decision is up to you, not up to your school.

Applying for Private Student Loans

Private student loans are totally different from federal student loans; they are almost like regular bank loans, which are mostly credit based as opposed to need based.

The FAFSA have no relation with private student loans.

Applying for private student loan you will be required to fill out a loan application form and a credit check will be run.

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How if you don’t have good credit or no credit?

Bad credit or no credit can’t keep you away from your college education. Here are the ways to prepare for the credit check.

Get a Student Loan Cosigner

A cosigner with better credit can help you to secure a private student loan on low interest rate.

Cosigner is the person who knows you and trust you it can be one from your parents uncle or guardian. Anyone from them will have to sign the loan promissory note along with you. If ever you became delinquent on loan payments or worse yet default, the cosigner is responsible for any payments.

Later on after having the loan for repayment you can work on rebuilding your bad credit. Be sure that the lender offers a cosigner release after so many on time payments. With every on time payment you build a credit history.

Repaying Student Loans

There is no match for federal loans as federal loans come with excellent terms such as subsidized Stafford Loans require you pay nothing until you graduate or leave school. Other federal loans that require interest –only payments may be deferred in some cases, until you graduate.

Most of federal loans are having 6 months grace periods and 9 months for Perkins Loans. You can use this time to get a good a job that will help in repaying the loan.

Student loans are essential for most of the students and the thing to remember always is that never overlook the FAFSA because it is the critical component in the college financial aid process.