Student debts are a complicated beast to understand.
One may think that getting a student loan is simple since 44 million Americans owe over $1.5 trillion in student debt, but the truth is very different.
Obtaining a student loan is a lengthy procedure that frequently starts before receiving a college acceptance letter. Continue reading to learn how to do it step by step at Oak Park’ No Credit Check Loans.
What is the procedure for obtaining a student loan?
1. Recognize the many forms of student loans
The details of student loans are complicated, but the first thing to know is that there are federal and private. The US government provides federal student loans, while a bank or other financial organization offers personal student loans.
Federal student loans are either subsidized (which contain a “grace period” during which interest is not accrued) or unsubsidized (which do not have a grace period during which interest is not accrued). If you plan to require financial assistance to pay for college, you should start by applying for federal help.
2. Gather the information you’ll need to fill out the FAFSA.
The FAFSA is the first step in applying for a grant, scholarship, federal student loan, or work-study program. Each year, you must complete the application you use for financial aid, whether you are a prospective or current undergraduate or graduate student.
You’ll need your Social Security number and driver’s license number, as well as a bundle of bank records, tax returns, and income details, to complete the application.
The actual application procedure, which takes roughly 30 minutes on average, maybe sped up by gathering all of the essential information ahead of time.
3. Make a list of schools that you’d want to visit.
Make a list of up to 10 colleges that you wish to receive your FAFSA application if it’s your first time filling out the FAFSA as a prospective student. If you’re applying online, you may seek school codes via the application.
FAFSA applications may be sent to up to four institutions on paper. On the federal student assistance website, you may get school codes.
4. Check to see if any schools need you to fill out a separate financial aid application.
Some colleges have their applications for financial help, so check with each one on your list and make sure you follow any different procedures for applying for assistance.
5. Fill out the FAFSA and go through your Student Aid Report.
You’ll get a report explaining what you put on your FAFSA within three weeks of filing it, either by email or regular mail. Verify that all of the information on the Student Aid Report is accurate. Log in to your account using the Federal Student Aid (FSA) ID you obtained throughout the application process and correct any errors as soon as possible.
Your “anticipated family contribution” — the government’s estimate of how much money your family may expect to spend toward college based on the income data supplied in the application — will also be shown on the Student Aid Report. This will assist universities in determining your need-based financial assistance eligibility.
6. Begin looking for private student loans.
The amount a student may borrow via federal student loans varies by loan type, year in school, and dependence status.
A dependent undergraduate student may take out a total of $31,000 in federal loans during their career, but only $23,000 can be subsidized. An independent undergrad may borrow the highest amount is $57,500, with subsidized loans having the same $23,000 limit. Graduate and professional students may borrow up to $138,500 in federal student loans during their career, but only $65,500 can be subsidized.
Most students will not obtain the maximum amount of government loans and rely on private lenders to make up the difference. Unlike government student loans, personal student loans need a credit history or a co-signer to be obtained. You may use a site like LendingTree to see what loans you could qualify for and compare lenders, or you can go straight to online lenders like SoFi.
7. In the spring, look for financial assistance award letters.
Financial aid award letters arrive in the spring, along with college acceptance letters, and detail the scholarships, grants, work-study programs, and federal student loans a student is eligible for, as well as the value of the help.
8. Before taking out the loan, accept any free money.
The Federal Student Help division of the US Department of Education recommends that you take any free aid you’re provided first, including scholarships, grants, and work-study programs.
After that, it’s advisable to take a subsidized student loan offer before an unsubsidized loan offer. A subsidized loan allows the borrower a grace period to repay the debt, generally until they graduate, when interest is not charged.
If the amount granted by federal lenders isn’t enough to cover the difference between what you can pay out of pocket, it could be time to look into a lower-cost institution or a private student loan.
9. Put your signature on a promissory note
The assistance offer letter will explain how to take the federal loan you’ve been given in detail, and you may even accept a portion of the loan if you like.
Suppose you take out a direct loan from the US Department of Education. In that case, you’ll be required to sign a master promissory note, which explains how interest is calculated, when it’s charged, various repayment plans, and deferral and cancellation policies.
10. Complete the admissions process.
Suppose you’re a first-time borrower of a federal student loan. In that case, you’ll have to go through entry counseling to show that you understand the loan terms and procedure, as well as other financial aid alternatives and your rights and obligations as a borrower.
The school may refer you to the Federal Student Aid Office’s 30-minute admission counseling seminar, or they may offer their own in-person or online program.
11. Get your money
Through a procedure known as a disbursement, the school will apply your loan funds to tuition, books and supplies, and room and board. You’ll be alerted once the school disburses your loan funds.
After your mandatory expenditures are met, any loan money left over will be credited to you by the school’s financial assistance office. If you find you can pay out-of-pocket and don’t need the loan money right now, you may cancel the loan amount with no interest or fees within 120 days.