How Do I Apply for a Loan?
Students who want the option of taking out a student loan must submit the Free Application for Federal Student Aid (FAFSA®) form. Your college bases its financial aid offer on information in the FAFSA form, and their offer may include federal student loans. You can choose to accept the offer or deny all or part of the offer. ( 4)
What To Do When You Have Surpassed Your Lifetime Loan Limit
For some college students, tuition and costs associated with attending school exceed the total amount they are allowed to borrow. There are three main ways that college students can handle expenses that exceed student loan limits:
Maximize your ability to get grants and scholarships, and tap savings before you take out loans. Talk with your financial aid office to identify sources of funding that you may not have previously known of. Ask about merit-based aid and institutional need aid. Find out whether you can get on a payment plan to take care of some of your tuition costs. Limiting your debt early in your college years can help you avoid reaching your lifetime loan limits before you finish school.
If it costs online payday loans Nevada more to attend school than you can cover with direct subsidized loans or direct unsubsidized loans, parent PLUS loans and grad PLUS loans may help bridge the gap.
Borrowers who received loan funds on or after , pay 5.3% interest, which is much higher than the 2.73% interest rate on graduate loans and the 4.3% rate on direct loans for undergraduates.
PLUS loan borrowers must have good credit, as defined by the Department of Education (DOE). Undergraduate students can’t access PLUS loans without help from their parents. Many parents may be unable or unwilling to take on debt to pay for their child’s education.
Students who have reached federal student loan limits may get the funds they need to pay for college through private student loans that aren’t subject to federal loan limits.
Lenders may have their own rules about student loan limits, however. Private loans may work for borrowers with good credit and favorable credit history, which could be difficult for young people just starting out.
Many undergrad students will require a cosigner. Remember that cosigners are equally legally responsible for the loan. If the borrower fails to make payments on time, the cosigner’s credit could be badly damaged. If the borrower defaults on the loan, the lender can come after the cosigner for payment.
It’s also important to note that private loans don’t come with the same protections as federally-backed student loans, and there’s no option for forbearance or deferment with a private loan.
For example, deferment, forbearance and repayment options are a given with federal student loans but not necessarily with private student loans. So taking on this form of student debt carries a higher risk!
Need a Student Loan? Talk to Charter Oak!
Here at Charter Oak Federal Credit Union, we encourage current and prospective students to learn about scholarships, including Charter Oak’s annual Scholarship Program , as well as available grants before considering loans to pay for college. Talk with family members about how savings may help pay for school, as well. Before considering private student loans, use federal student loans to pay for college.
Charter Oak provides student loans in partnership with Sallie Mae®. These student loans can help both undergraduate and graduate students get the money they need to pay for school.
- Multiple repayment options
- Competitive interest rates
- No prepayment penalties
- No origination fees
It’s crucial to understand future loan payments, including how long you’ll make monthly payments and how much of your future income you’ll devote to student loan payments before considering taking out a private loan. Students should also research the earning potential of their field of study so they are prepared for the reality of how much money they’ll make after completing their education.