How to get a student loan
It’s no secret that getting a degree has grown more expensive in recent years. According to data from The College Board, the cost of tuition and fees at public four year institutions increased by 17% over the past five years alone.
Despite the rise in tuition costs, we continue to see degree holders thrive with better odds in the job market. Indicating that the need to go to college is not going away.
The right degree is a great way to follow your passion and make yourself marketable at the same time. Still, with the costs of college and graduate school are only climbing upward, what do you do?
You may be ready to join the 40 million Americans who have student loans. Borrowing to pay for an education may seem daunting, but despite what you may have heard or read; borrowing can be affordable and manageable. Only you can decide whether loans are the best choice for you.
Your uncle, your cousin, your boss at work – it seems like everyone these days has student loans. They must give them out to anyone who asks, right?
Not necessarily. Read through this post to figure out exactly how to get a student loan.
How to Get Student Loans
While the requirements for student loans aren’t all that restrictive, there are certain criteria you must meet before being considered.
This is different at the federal and private level, but just about any loan you receive during your lifetime will have some hoops to jump through first. In fact, any lender giving out loans without restrictions is probably predatory – and best avoided.
Looking to see if you qualify for federal or private student loans? Read on.
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Criteria For Federal Student Loans
If you’re looking to get a federal student loan, here is the standard criteria:
- You must have a valid Social Security Number.
- Men must be registered with the selective service. Male students between 18-25 have to register with the selective service to receive loans.
- Be a citizen or eligible noncitizen. Undocumented immigrants are not eligible to receive federal or state funding. Permanent residents with green cards can apply for aid. Immigrants with T-1, battered-immigrant-qualified alien, or refugee status may also be eligible.
- Have a high school diploma or equivalent, such as a GED or certificate from a homeschooling program.
- Enrol in an eligible school. Students at unaccredited schools might not qualify for federal aid. Some schools also choose not to receive federal aid.
- Fill out the Free Application for Federal Student Aid. Any high schooler interested in financial aid needs to fill out the FAFSA, a form that asks for your family’s financial information to determine how much you qualify for. Even those with little to no demonstrated need can be eligible for student loans, so officers encourage everyone to apply. Without the FAFSA, you won’t receive any federal loans, scholarships or grants.
- Be in good standing with federal financial aid. Students can’t be in default on other federal loans or owe money on a federal grant.
- Maintain a 2.0 GPA. Students need to maintain a 2.0 cumulative GPA or risk losing financial aid until their grades improve.
- Be at part-time status or more. Students must be considered part-time to be eligible for loans. Each college determines what part-time and full-time status means, so ask your financial aid officer how many credits you’ll need to take.
Subsidized Vs. Unsubsidized Student Loans
It can be tough to understand the difference between subsidized and unsubsidized student loans.
For a more in-depth explanation, read more about subsidized and unsubsidized student loans here. Only students whose FAFSA shows financial need can receive subsidized loans, which don’t charge interest while still in school.
Students who defer their loans are also eligible to not pay interest during that time.
Students who fill out the FAFSA, and don’t meet the requirements for “demonstrated financial need” can receive unsubsidized loans, which levy interest during the semester and the six-month grace period following graduation.
Parents can take out unsubsidized PLUS loans for any dependents, for the total cost of attendance; excluding other loans or scholarships the child has received.
Private Student Loans
Students who don’t receive enough aid from the federal government can qualify for private loans. Private loans typically require a cosigner, such as a parent, who promises to take on your loans if you fail to make payments.
Each private loan servicer has different requirements, so it pays to shop around to find the best option for you.
Most require a minimum income and a qualifiable credit score before they’ll agree to lend to you. This is why private loan borrowers often need a cosigner since college students typically have little to no income, or credit history.
In other words, if it sounds too good to be true – it probably is.