Are you overwhelmed by the massive amounts of information concerning student loans? Do you just need a simple explanation of how they work, what they do, and how to make the most out of them?
Finances, loans, and debt are never a fun subject and it’s one of the main causes of stress in America, but it doesn’t have to always be so hard. All of your questions have the answers you seek about your student loans.
What Is The FAFSA?
If you haven’t heard about the FAFSA yet, it’s important you learn now. FAFSA stands for Free Application for Federal Student Aid.
Most high schools recommend and encourage you to fill one out during your senior year as soon as possible. It’s the best way to get access to student loans and pay off your college so you can get the education you need to get started in this world.
How Do I Get The FAFSA?
Getting your FAFSA filled out is extremely important to your career as a student. Not everyone realizes the importance of this form, but it can be life-changing. Follow these steps for filling out your FAFSA.
- Fill it out ASAP! Financial aid is usually first to come, first serve. You should fill out your FAFSA as soon as possible in the new year to get the most benefits. Failure to get yours in a timely manner could result in being approved for no money at all.
- Fill it out every year! Each year you are in school, you’ll have to fill the form out again and submit it. Yes, this can be frustrating, but your school should have a financial aid office to help you.
- Fill it out completely! Don’t leave any empty spaces and give true and complete information.
- Gather your documents! Be fully prepared to submit a bunch of documents with your FAFSA, from bank statements to W2 forms to pay stubs. They need to know just about everything concerning your financial situation, so be timely in your gathering.
Types Of Student Loans
After you have submitted the FAFSA, you can be approved for several different loan types. Each will offer a few different options, and it’s up to you and your family to decide what works best for you. Pay close attention to the differences between each to ensure you get the best option.
- Stafford Loans: Low-interest loans offered by the government. Some are subsidized and some are not. These work on a needs basis.
- Parent Loans: these are loans given by the state to the parents of the student and are required to be used only for necessary school expenses.
- Perkins Loans: The school you attend finances this loan, but it is capped out at $27,500 and comes in limited quantities.
What Is The Difference Between Subsidized and Unsubsidized?
Among many terms you may have never heard of before, subsidized and unsubsidized will appear quite often. These refer to two different loan types, and you will qualify for either one or the other.
Subsidized loans do not charge you interest while you are in school and have a grace period before the APR sets in. The government covers these fees for you up until the grace period ends.
Unsubsidized loans are the exact opposite and you begin to acquire interest from day one.
It’s highly unlikely you’ll be able to pay off your student loans before a grace period with subsidized loans ends, so the less interest you have to pay, the better. This is why subsidized loans are preferred, if possible.
How Long Does It Take To Get Your Student Loan?
Depending on the type of loan you got, it can take anywhere between a week to a couple of months to either have the funds sent to you or in the form of a refund check. Your financial aid depends on the loan you took out, how much you qualified for, and other factors relating to these details.
How To Find Out Where Your Student Loans Are
It can be surprising how many people aren’t sure where exactly their student loans came from, how to pay them, or the exact process concerning it. Losing focus and forgetting details is common, especially as a stressed college student suffering from long study sessions and fueled by Ramen and Monster.
The National Student Loan Data System holds all of the information concerning your student loans, and you can access this by clicking on the financial aid tab. You’ll have to create an account and log in, but it’s a secure site, so it’s entirely safe to do so.
All of the information concerning your loans will be available, from interest rates and loan dates. It’s available to access at any time, too.
4 Helpful Tips For Choosing Your Student Loan
Simply the process and discover student loans in an easier way by following these tips to end the stress.
1. Compare interest rates
Don’t ever accept a loan without looking into all of your other options. It may take some math and calculations, but every little decimal counts. Think long-term and compare the different rates included in your loan offers.
Since most loan terms can extend up to 30 years after graduation, it can make a huge difference to pay attention to even a dollar of difference when it comes to your monthly payments. Do some window shopping.
Many schools will also offer assistance in applying and receiving loans. Take advantage of this!
2. Consider debt consolidation
Many private loan companies offer extensive debt consolidation loans. Knowing when you can consolidate student loans and what is the best time for you can help you decide if this is the best option for you.
Debt consolidation loans take all of your outstanding balances, pays them off, and allows you to make single payments for all your debts directly to them.
This can help lower interest rates. You should look into consolidation loans if your payments become too much to handle monthly or your income drastically changes.
3. Renew loan terms based on income
Changing the original terms of your loan can be beneficial if your income changes a lot, which it is likely to do within the term. If you start to bring in more income, you could increase your monthly payments, shorten your term, and see fewer interest charges.
On the flip side, if you suddenly have a dip in income and can’t keep up with your payments, changing what you owe monthly can keep you from falling behind.
4. Start saving early
The more money you have to begin college, the less you’ll have to get for a loan. In the end, that means less money squandered on interest charges. It’s beneficial to begin saving as soon as possible to lessen the need for government aide later on!