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Loans for college
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Applying for a Federal loan is easy. When you wish to apply for these loans you are required to fill a form which is known as the Free Application for Federal Student Aid (FAFSA). While filling the form you would have to provide a lot of personal as well as family related information that is necessary and required by the department to consider your application for assessing the amount that you can request for.
The information that you provide is thoroughly checked and scrutinized. This helps the department to assess the amount that the applicants family would be able to contribute towards the educational costs. Besides this also helps in assessing the total cost of education. The difference between the two amounts would be the amount that the applicant can request for.
To be eligible for these loans for college there are certain requirements that the applicant needs to fulfill. In case you fail to meet any of the requirements then you can be declined of the loan. Some of the most important requirements include:
You are required to be a U.S citizen You should have a valid Social Security Number You should be eligible for higher education You should not have any default or bankruptcy on your credit report
When talking about finance help from the U.S Department of Education Aid there are three options that can be considered. These options include Student loans, Federal Grants, Student Work Programs. Let us see each of these options in detail.
Grants ate financial assistance that doesnt need to be paid back. For being eligible for grants the government focuses on the financial need and the failure to obtain finance through any other source. The grants are given on a first come first serve basis.
The student loans are obtained readily from the federal department
but one should keep in mind that the student loans are not given by the government but are sponsored by them. These loans have to be paid back in a specified duration of time. However the interest rates are comparatively low and the repayment term of the loan is longer than the private student loans.
Under the student work program the applicant is supposed to work for a government agency so that he can pay for his/ her education. The job is usually part-time and in case it is full time only a part of the salary gets cut.
Besides the federal loans for college there are a number of people who look for private loans. These loans can be either secured or unsecured depending on the financial status of the parents. Usually people cash the equity on their house in order to meet the education expenses of their children. Getting private loans can be easy if the parents have a good credit report and provide a security for the loan. The interest rates on these loans vary from one lender to another. However if you have a good credit score and the value of your collateral is also much then you can negotiate with the lender for lower interest rate.
When you think of getting a loan for college there should be a few things that should be taken into consideration before you start your search. Some of these points are mentioned below.
The interest rates- the interest is the extra amount that you pay on the loan amount. This is paid for the lenders services and the interest is calculated on the total amount of the loan that is borrowed. People usually jump for loan offers with a lower interest rate but forget to look at the repayment terms. There are times when the loan with a higher interest rate also offers a good deal with good repayment terms.
The repayment terms- after the interest rate the next major point is the repayment term of the loan. These terms differ from one lender to another just like the interest rates. The repayment terms are the instructions that the lender gives to the borrower regarding the payment of the loan. These would include options like automatic withdrawal, or making payments using stubs, the time period that would be allowed for the payment of the loan. Good repayment terms even with a slightly higher interest rate would be the best deal that a person can get.
Students can also avail scholarships. Students who have been performing well throughout high school can apply for scholarships and if they get full scholarship then they dont have to apply for any loans. But this is not possible for everyone. Many times it happens that the students qualify for partial scholarships. The reason being that the scholarships are not funded properly and it depends a lot on the luck whether the student gets a full scholarship or a partial one.
If no option remains for the loans for college after everything has been tried then the last option should be a line of credit. The funding with such type of a credit would be on a semester basis and this can help the student and the parent to raise funds as per the requirement. In contrast to the equity loan you would not have to take the loan more than the required amount. When taking private student loans you are required to do some smart shopping and if you have a good credit score then you should not hesitate in negotiating with the lender. The borrower should target more than one lender at the same time. Taking a loans for college can also help people who have a bad credit history to improve their credit status by making the payments on time. All the payments that the borrower makes are reported to the major credit bureaus and are noted. Other Articles |
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