Student Loans

You can apply for student loans if you need financial assistance to cover the cost of tuition. It is important to remember that a loan is a sum of money you borrow and pay back with interest over time.

Before applying for a student loan, you should first determine how much the loan will cost to pay back after you have graduated from college. Preparing yourself for the responsibility of taking out a student loan is the first step toward gaining financial assistance.

Federal student loans are available in varying amounts, and you will need to select an option providing you with the financial assistance you need for your academic timeline. The loan amount will also be influenced by whether you are applying as a graduate student or if you are applying as an undergraduate student. Keep in mind that you will most likely be required to fill out a FAFSA in order to qualify for many types of student loans. Use the following information to help you decide what student loan option is the right choice for you.

Student Loan Options

The U.S. Department of Education offers numerous student loan options for undergraduate and graduate students to choose from. There are two primary student loan types available: the William D. Ford Federal Direct Loan Program and the Federal Perkins Loan Program. Loans falling under the Ford Federal Direct program are federal loans where the U.S. Department of Education will be your lender. The four loans under the William D. Ford Federal Direct Loan Program include the following:

• Direct Subsidized Loans are afforded to qualified undergraduate students who need financial assistance to cover the cost of a college degree or career school program. You must demonstrate financial need to be eligible to receive a direct subsidized loan.
• Direct Unsubsidized Loans are afforded to qualified undergraduate students, graduate students and professional students. You do not need to demonstrate financial need to be eligible to receive a direct unsubsidized loan.
• Direct PLUS Loans are afforded to graduate students or professional students who need assistance covering the cost of education that has not been covered by financial aid. Additionally, parents of dependent undergraduate students can receive a Direct PLUS Loan to assist in covering the cost of tuition for their children.
• Direct Consolidation Loans can combine all eligible student loans you have received into one student loan, available with a single loan servicer. You can choose this option if you wish to make one consolidated payment toward your student loan instead of individual payments toward multiple loans.

The student loans classified under the Federal Perkins Loan Program are school-based loans where your college or university is the lender. Undergraduate students and graduate students can qualify for the Federal Perkins Loan Program if the service is offered by your school. You can speak with a representative from the financial aid office on campus to determine if this program is offered and how you can apply if it is.

Benefits of Using Student Loans to Assist with the Cost of Tuition

Choosing to apply for a student loan in lieu of a private loan can save you money over time. Student loan interest rates tend to be significantly lower than the interest rate for private loans. Additionally, you do not need to receive a credit check to establish eligibility for many federal student loans. You do not need a cosigner for most student loans, either. This means that you are able to receive a student loan based on your personal income and information, making it easier to obtain approval for the loan you need.

Additional benefits include the following:

• Manageable timelines for you to begin your payments are offered to borrowers. You do not have to begin repaying your student loan until after you have graduated from the school program you are enrolled in.
• Receive interest rate payments from the federal government while you are still enrolled in classes. To determine if you are eligible to receive payments from the government to cover your interest rate while you are still in school, you will need to contact the U.S. Department of Education directly.
• A variety of flexible payment options to compensate for your inability to pay at any given time. You can choose to restructure your repayment plan if you begin to have difficulty managing your payments after you have graduated. You can choose to postpone your loan payments, as well, if you anticipate being in financial need for an extended period.
• Certain employers may choose to assist employees with the cost of federal student loans if the employee meets certain conditions. You can speak with your employer directly to determine whether the company you work for will help you to pay down your student loans. You will still need to pay a portion of your student loans if your employer provides this service. However, part of your student loan will be forgiven if this option is available to you through your employer.

How to Manage Your Student Loan Responsibly

While taking out student loans is a beneficial process, you will need to be prepared for the financial responsibility of this decision. A loan is considered a legal obligation, meaning you are legally accountable for the payments made to your student loan each month. To ensure you are managing your student loan responsibly, you should keep a detailed account of how much money you have borrowed with your loans as you are receiving them from the federal government. If you accurately keep track of how much money you have borrowed, you can determine how much you can afford to pay toward your student loans once your bill arrives. If you are unable to repay the loans with interest you can significantly damage your financial profile for years to come. The first step toward managing student loans properly is to ensure you are not taking out more money than you can afford to pay back later.

You will need to consistently make your loan payments on time to avoid penalties or legal action. You must also ensure you are paying the full amount for each payment when you receive a bill for your student loans. Partial payments do not count toward fulfilling the obligation of your student loan payment agreement. It is important to remember when you make payments each month, as well, as you are legally required to make your payment each month regardless of whether you receive a bill or reminder.