A big worry among prospective students is whether or not they will be able to afford college.
If you are a student faced with a situation of trying to get a student loan, you are not alone. The process itself is fairly easy and the benefits, of course, are the ability to have the money needed to pay for college and get a degree.
Luckily, a student loan is one of the easiest loans to obtain. All you usually need is a cosigner and you can be approved for a decent size student loan to use on your college expenses.
The great thing about student loans is you typically don't have to start paying them back until after you finish school. Of course, when trying to get financial aid to pay for college, you should always try and get grants and scholarships first, as those don't have to be paid back. Check for college scholarships and see what you can qualify for. It may not seem like it, but an extra $1000-$2000 towards your college education can really come in handy.
The government offers subsidized and unsubsidized student loans that can be obtained by filling out the FAFSA. Subsidized loans are for those who demonstrate financial need and the interest on the loan is paid by the government while you're enrolled.
The basic eligibility requirements for a Federal Student Loan are:
- Show financial need.
- Have a valid Social Security number.
- be a U.S. citizen or an eligible noncitizen.
- Be studying for an eligible degree or program.
- Maintain satisfactory academic progress.
- Not be in default on a federal student loan.
- Register for the Selective Service (if you are a male and between the ages of 18 and 25).
If, for some reason, you are not eligible for a federal student loan, you can always go with a private student loan. Probably the most overlooked form of student loan is the private student loan. Most students will just fill out the FAFSA and call it good, but many private lenders can offer financing for college. Private loans such as these can still qualify for student loan consolidation.
Private student loans are issued based on your credit and that of a cosigner. The better the credit score, the lower the interest rate. Typically, students just graduating from high school don’t really have an established credit record, making it almost impossible for them to get a loan by themselves and if they do, it generally is at a very high interest rate. This is where a cosigner comes in handy.
Having a cosigner with a decent credit score will get you the best interest rate possible. This is a huge bonus because the difference between a 5% and 10% interest rate is huge in the long run and can save you thousands of dollars over the lifetime of the loan. Also, having a cosigner will allow you to apply for premium student loans and increase your chances of being approved.
It seems like a no-brainer to use a cosigner on a private student loan. The real question is how does cosigning for a loan affect the cosigner? One must know that cosigning for a loan means the cosigner is guaranteeing to repay the loan should the borrower fail to make the required payments.
One of the best candidates to cosign are parents since they will usually help out with college costs and will probably be the easiest to get to cosign.
Here are some steps to take when looking for student loans:
- You usually need a good co-signer, so keep one in mind.
- Talk with your school's financial aid counselor.
- Fill out the FAFSA and get it in on time. Check FAFSA deadlines.
- Check with your bank.
- Check local credit unions.
- Ask relatives, maybe they can help fund your education.
- Check out student lenders online
If you are searching for a private student loan, use a student loan comparison tool to compare rates on student loans from various lenders.