Once you have your college admission form, then the needy students might be looking for a scholarship or a student loan that will help finance their study. In this process, they first have to find a scholarship or to search for an organization to apply for a student loan.
As a new person applying for the student loan, they will have to follow certain steps to ascertain that the entire application process will be hassle-free. A survey that was conducted by The College Board revealed that annual fees at a public college equate to $9,410 while annual fees in a private college equate to $32,410. This makes college fees unaffordable to most people hence the need to apply for student loans.
Below, we have provided you with a comprehensive systematic guide on how you can successfully apply for student loans. This will guarantee that you have enough finances to sustain you in tough college life.
Steps to follow when applying for a student loan
#1 Let student loans be your last option
Before you decide to apply for a student loan, you should first make sure that there is no other form of financial aid that you can access. Other than student loans, the most common way that students get to pay their college fees is through:
#2 Scholarships – A student will not have to pay the scholarship money back as is the case with student loans. Scholarships are gotten through academic or athletic achievements. You can search the internet to try to apply for the many scholarship opportunities that are available.
One can get scholarship opportunities from,
- Nonprofit organizations
- Private businesses
- Professional institutions
- Any other willing individual or establishment
#3 Grants – grants are also another way that students can get to fund their college funds. One does not have to repay grants, which is the same case with scholarships. One can get grants through the following:
- Federal grants
- Grants from the tertiary institution
- State grants
- Local grants from NGOs, private businesses, philanthropists and for-profit institutions
- Work-study programs – this is a program where one gets a part-time job that will help pay for their college fees and other expenses.
All the above means of financial aid will help to ensure that you are able to take care of finances in college. It also reduces the need for a student to get a student loan.
#4 Look at different options
There are two ways that a person can get student loans. They can get them through the federal government and private student loans. These two options ensure that a student gets financial help that will them pay for their college expenses. Federal student loans are the ones that are gotten from the department of education while private student loans are those that are gotten from online lenders, credit unions and banks.
#5 Description of federal student loans
Federal student loans are those that are given by the government and in relation to other types if student loans, these have low-interest rates. They also have better and flexible repayment terms. There are two types of federal student loans and these include:
- Direct subsidized loans – this is given to an undergraduate student who shows the need for financial help. In these loans, the government will pay the interest that the loan has accrued while you are still in school and for six months after graduation.
- Direct unsubsidized loans – these are given to any student without evaluating their need for financial aid. In these loans, the student pays the loan together with all the interest that the loan has accrued.
It is advisable that you go for a federal student loan as your first option. This is because these loans have a relatively low-interest rate. Congress sets the rates and the student has protection and other benefits that will aid their loan repayment. Research is paramount before deciding on whether to go for private student loans or federal student loans. The great thing about federal student loans is that they have a grace period of six months. This is the time after graduation that you are expected to look for a job and start repaying your loan. Once you get a job, you can apply for a repayment plan and you can select a monthly bill that you can comfortably pay.
#6 Description of private student loan
If the money that you get from federal student loans is not enough, you can opt to go for private student loans. These can be gotten from banks and other financial institutions and they have interest rates that are relatively higher. One of the cons of these loans is that you may be required to start repaying while you are still in school.
Undergraduate students cannot get private student loans on their own. They have to get a cosigner who will help them with the loan. The cosigner can be a relative or a parent and they should have a positive credit and good income. These lenders opt to have cosigners because they will help to reduce the likelihood of defaulting on the loan.
#7 Collect enough information
If you choose to apply for a private student loan or a federal student loan, you have to get enough information that will make the loan application process easy. These include:
- Adjusted gross income: one is required to submit the adjusted gross income of themselves and their parents.
- Tax returns: you can choose to either have a paper tax return or make use of the IRS Data retrieval. You should show a tax return for the past two years. You should also submit your parent’s tax returns.
- Social security numbers and dates of birth
- Asset information: asset information required may include your account balance
- The schools that you are interested in joining
- Comprehensive information on grants and scholarships that you have previously received
#8 Fill the FAFSA
The only way that you can get financial aid is if you complete filling the Free Application for Federal Student Aid (FAFSA). This will be used to determine the amount of aid that you will receive. Completing the FAFSA is very easy but you are advised to fill it early because those who fill it early get more chances for getting financial aid.
The FAFSA can be completed online and the only thing you need is your federal student aid ID that you can then use to track your application.
Completing the FAFSA will then provide you with a Student Aid Report. This is all your financial information and expected family contribution (EFC). This will give the lender an approximate amount of how much your family will put into your education. If the student aid report is not correct, you can easily alter it by going back to FAFSA.
#9 Fill in your CSS profile
Another type of aid that you can get is institutional aid from the school that you are going to. This, however, requires that you fill in your CSS profile. You will create an account, choose the schools that you want to join and give other information like finances and assets. To submit the profile, you will have to pay $25 and an additional $16 for every alteration that you make. You can go to the College Board to get help in completing your CSS profile.
#10 Analyze your financial aid award letter
Once you have completed the above steps, you will receive a financial aid award letter that will tell you of the amount of aid that you will receive. This will tell you the amount that you will be required to pay in your school, the loans that are available and the amount that you have gotten from the scholarship or grant. Once you receive the letter, you have to sign it to show that you accept the terms and send them back to the financial aid office in your school.
#11 Decide whether you still have to apply for private student loans
One may find out that they need more financial aid than the one that they are getting from the government and the school. This may require you to apply for a private student loan. Private lenders will have to analyze your eligibility for the loan and then determine the interest rates that they are going to charge on the loan. The amount of aid is gotten through your credit score and the credit score of your cosigner and if the degree that you are pursuing is marketable in the job market.
You should ensure that you analyze various lenders before settling for one that has favorable terms. You will have to submit a lot of information to the lender and then state how much you want to borrow and the school that you are interested in going.
The money may take some time before being approved which is why you should ensure that you submit your application as soon as possible to avoid disruptions.
#12 The next step while applying for a student loan
Now that you have enough information that will help you to apply for your student loan, you now have a way that you can pay for your college fees. In as much as you can qualify for multiple loans and huge amounts of money, you should ensure that you minimize the amount that you take. This will help you later when you start repaying your loan.