How To Get An Education Loan
There are many education loans available to people that wish to attend college. An education loan is financial aid that must be repaid. Such loans are therefore in a category of aid called self-help, since, by repaying the amount borrowed, interest and loan fees, you are ultimately the source of the funds. On average, over 60 percent of financial aid is in the form of loans. The federal government sponsors the largest number of education loans and guarantees them, meaning that, if a student doesn't pay back the loan, the government will reimburse the lender. The government also subsidizes Stafford loans for students with financial need, meaning that the government pays for the interest that accrues while you are in college. The interest rates for education loans are relatively low, compared to the rates of regular retail loans, and repayment doesn't begin until after you leave college. The first step in applying for a student loan and, indeed, for all financial aid, is completing and submitting the Free Application for Federal Student Aid, or FAFS
A: Once a college has offered you admission and has determined your financial need, the actual education loan application is the federal Master Promissory Note. This is a contract between you and the lender showing that you agree to the terms and conditions of the loan and fully understand your responsibility to repay the loan with consistent payments within the time period specified. This one promissory note may be used for all education loans you may receive for up to ten years. It is a relatively new and convenient service that greatly simplifies and speeds up the loan application process, especially if you need to borrow additional funds or get a different type of education loan. Sometimes, students are surprised to find out that, besides the interest on the loan, they have to pay additional charges, such as loan insurance and a loan origination fee. In most cases, these are deducted from the amount the student receives. Federal education loans have various repayment plans, each of which may be interrupted by special circumstances, such as returning to grad school. These plans may allow you to make fixed payments each month, payments tied to the amount you are earning at the time, or graduated increases in monthly payments. If your financial aid package does not cover all your expenses while in college, there are a few other student loan programs worth investigating. For instance, some lenders offer private loans earmarked for education. Some colleges also have their own loan program. Even some private organizations offer loans, though they may list them along with scholarships with the college financial aid office. College and private organization loans may offer a lower interest rate than from other sources, though the maximum loan limits may be fairly low. Loans are an integral part of college financing for most families. When investing in a college education whether you use savings or loans or work to pay for it, it is a smart choice for your future plans.