Student Loans and 7 Things You Need to Know – Video
If there is one thing which seems to be common among almost all students, it has to be student loans. They are becoming increasingly common among students owing to the high cost of education in America. Back in October 2015, The Institute for College Access and Success reported that almost 70% of all graduates from public and even private nonprofits colleges had student loan debt.
The most complicated thing about student loans is that not everyone gets a hang of them and this is why Ameritech Financial wants their clients to know the details of student loans so they know what they are getting into.
1. The many different loan types
Broadly speaking, there are two different types of student loans: federal and private. The federal loan, as the name implies, is disbursed by the federal government and students with high school diploma are eligible for it.
Private loans, on the other hand, are offered by private banks and finance bodies. The eligibility and rate of interest depends on the credit score and other factors too. However, there are different types of federal loans and private loans which are disbursed based on certain financial qualifications, and are dependent on who is actually taking ownership (or co-ownership) of the loans.
2. Getting federal loans
In order to get the federal loan, you have to fill out the Free Application for Federal Student Aid (FAFSA). This application helps the government in assessing how much you and/or your family can pay for your college expenses.
Private loans can be applied directly to the bank/financial bodies.
3. Loans may be a part of the financial aid award
After your acceptance to college, you may get a financial aid award letter. The name is misleading as the financial aid is likely to include loans which you need to pay back. You need not borrow the full amount for which you are qualified. Choose wisely, as you will be responsible to repay what you end up selecting.
4. The interest kicks in early
Student loans come with an interest rate and as soon as the loan amount is offered to you, and your interest calculation begins. While you’re in school, interest may accrue differently, or not at all, depending on if you’re loans are unsubsidized or subsidized by the Department of Education. Check the details thoroughly before finalizing the loan application.
5. The grace period
Most student loans come with a grace period. You are not liable to start paying them until six to nine months after you have graduated. This period is called the grace period and it varies based upon the type of loan. Unsubsidized loans will keep piling interest even during the grace period.
6. Repayment options
Federal loans have a default fixed month bill for 10 years, but there are other payment options which you can track for quick repayment of loan. Private loans do not offer too many alternatives and a discussion with the lender might be the best choice.
7. Federal loans could be forgiven
There are a few professions which if you work in can help you get your federal loans forgiven. Income driven repayment plans can come in handy where the loans can be let off after you have made payment for 20 or even 25 years. Check the details to make the most of it.
Do your research! Receiving and repaying student loans isn’t as easy as filling out a simple form. The more educated you are in the student loan industry, the more prepared you’ll be when your repayment obligation begins.
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