5 Important Things to Know About College Loans
College Loan Tips
- How do I start the college loan process?
- Who gives me the college loan?
- What about college loans from banks?
- What do the funds from a college loan cover?
- What are the repayment options for college loans?
With tuition rates rising, many students feel the pressure of trying to pay for expensive degrees and college loans are a popular choice. Students, both current and future, know that attending college is necessary to get a good paying job, but how can they afford that degree?
College loans are often the best option for paying for an education and learning the ins and outs before you start school is imperative. Listed here are 5 common questions and answers about student loans.
How do I start the college loan process?
The first step in starting the college loan process is to fill out a FAFSA form. This form gives the government information about your current income and educational progress. The amount you are awarded is based on several factors including age, income, family and marital status, as well as how far you are in your degree studies. Filling out the FAFSA helps get your college loan process started.
Who gives me the college loan?
After filling out a FAFSA form, your college will notify you of how large of a loan you have qualified for. Even though the government is the one giving the loan, the college reports and distributes the loan. If you are not yet attending a school, you can list several schools on the FAFSA and then accept the loan from whichever college you end up attending.
What about college loans from banks?
Banks and other lending institutions also provide student loans for college. Before getting a college loan from a bank, you will want to review the interest rates and see if they will be variable or not. Unlike government college loans, banks and other lending institutions can start charging interest right away and change interest rates.
What do the funds from a college loan cover?
The money awarded in a college loan goes directly towards paying for your tuition. As a student, you are allowed to choose how much, or how little, of the total loan offered you actually want to take. If you choose to borrow more than what is needed to cover your tuition, you will be given the rest in a refund check or pre-paid debit card. This money can be used to pay for books or any other expense.
What are the repayment options for college loans?
College loans must be repaid. If you borrow from a bank or private institution, you will have to meet their repayment requirements. These can sometimes be less flexible than if you obtain a government loan by filling out a FAFSA. Government loans have several repayment options. There is the standard option, where your payments are a set amount and stay that way throughout the life of your loan. There there are income-based options where the amount you pay is based on what you earn each year. It is also possible to put repayment of government loans on hold during periods of hardship or unemployment. The variety of repayment options offered from the government loans is just one reason why they are more attractive to students.
Figuring out how to afford college can be a stressful situation. When used appropriately, college loans are a great way to obtain the degree of your dreams.
See Also: Can College be Affordable?
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