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There are basically two places where you want to actively look for student loans. The first would be the federal government and the second would be private lenders. In order to be considered for any of the loans given out by the federal government, you are first going to fill out a lot of paperwork called the FAFSA which stands for Free Application for Federal Student Aid. This paperwork is then sent to the colleges that you think you are most likely to apply to.
There are four main federal student aid programs:
1. Federal Stafford Loan
2. Federal Plus Loan
3. Federal Graduate Plus Loan
4. Federal Consolidation Loan
The Federal Stafford loan is issued in the student's name, is mainly based on need and a credit check is not required. The sweet thing about this loan is that it does not have to be repaid until after the sixth month the student graduates from college, chooses to leave the college or university or stops attending college at least half of the time. Some colleges and universities offer the Stafford loan directly through our U.S. Government.
These are commonly called Direct Stafford Loans. The schools that offer these loans are usually known as Direct Lending Schools. Many other schools may offer the Stafford Loan but it will be through banks and other lenders. Schools that do this are commonly known as FEEL schools or Federal Family Education Loan schools. You will definitely need to choose a lender if you choose getting your Stafford loan through a FEEL school.
A Federal Plus loan is made in the parents name. Although a credit check is a requirement, it is not as stringent as a credit check may be for another type of consumer loan. After the loan is fully dispersed, repayment of the loan begins. Some colleges and universities offer the PLUS through the U.S. government and others offer it through other banks and lenders.
The Federal Graduate Plus loan is similar to the PLUS loan for parents. The one major difference is that it is made in the graduate student's name. You must keep in mind that you are obliged to repay this loan once it is fully disbursed. You may choose a deferment option as long as you are attending college at least half-time. Check with you financial aid officer for any other particulars.
Federal loan consolidation is for the student who is in repayment status. It is also for parents who want to extend the repayment period on any current PLUS loan and obtain a fixed interest rate for the rest of the life of the loan. All of your federal student loans may be able to be put into one loan using the Federal Consolidation Loan. Once you decide to consolidate, this locks in the interest rate you must pay on your loan.
If your costs are too much for federal loans to handle, then you may want to try to find a private student loan. These are made by banks and through other lenders. Their purpose is specifically for educational expenses. However, these loans offer the flexibility and convenience that are not found in any other federal loan programs. In order to obtain a private loan, you must have good credit and you will also have to have a qualified co-signer. Once you find a loan that meets all of your needs, it is easy to apply online and even get an instant response.
Before applying for a student loan it is wise to think about how you will be repaying the loan. Even though you may think you have many years ahead to solve that problem, the truth is that once you apply for a loan the loan terms are fixed and you will have to stick to them even if the circumstances change.
Avoid Future Problems
Today financial decisions will determine your future financial worthiness so you need to make sure you commit to a repayment program you will be able to honor. Otherwise you may end up defaulting on your student loan and damaging your credit for many years.
Try to Determine your Future Income and Expenses
Start by analyzing your future possibilities: what job opportunities you might have when you graduate? How much will you be able to earn? How much will you be able to save? How much will you have to spend? Don't be too optimistic, keep it real and then determine a probable monthly installment for your student loan. Remember not to set it too close to your limits or any unexpected expense would turn it unaffordable.
Select the Type of Student Loan that Best Suits your Needs
There are many types of student loans so you should do your research before applying, not all of them will be suitable for you and you may find some loans more appealing than others. Most of them are not due till after graduation, sometimes even six months after graduation. However, you may find loans that are payable before graduation. If you have the money and don't want the repayment schedule to last many years after graduation, you should choose these loans.
Get a Waiver from the Government Agency
When it comes to federal student loans or state government student loans, you'll find that your debt can be reduced just by applying for jobs on certain areas designated by government agencies where the administration has special interest in satisfying specific needs. For further details contact the government agency that grants the particular loan.
Refinance your Student Loan to reduce the Monthly Payments
On the other hand, if your student loans are private, you can negotiate with your creditors if you can't meet your monthly payments. You can always agree to a loan refinance where the loan length will be extended and the monthly installments reduced. Moreover, if market conditions have improved you could even get a lower interest rate and trim down your payments even more. Always keep an eye on interest rates; you can save thousands by refinancing.
Reach a Settlement to Reduce your Overall Debt
Another option is to reach a settlement with your lender where you will be able to get a reduction on the loan principal in exchange of keeping the current interest rate and schedule. This should be done only if you find yourself incapable of meeting your monthly payments. It is best if you foresee such a problem and agree a more suitable schedule from the beginning.