Knowing how to go about getting a federal student loan is a crucial step in the college application process. College tuition fees are out of reach of most families in America. The only way most families can afford to send their children to college is by taking some type of loan. When it comes to student loans, taking federal loans is far better than taking private loans for several different reasons.
Basic Steps To Getting A Federal Student Loan
Applying for a federal student loan starts with completing and submitting the FAFSA—Free Application for Federal Student Aid. This form collects your family’s financial information in detail. After you’ve submitted the form, they will then calculate how much financial aid you are entitled to, based on the information you’ve provided.
The financial aid package that is offered to every student typically includes a combination of student federal loans, grants and the financial assistance offered by the school you are applying to. This package is different for every student. Your financial aid package and federal student loan offered will be tailored to your unique circumstances.
The most important thing to keep in mind when filling the FAFSA is to make sure that the information you provide is accurate down to the smallest details. Submitting wrong information will void your application and you risk losing any loan that you may be eligible for. If your circumstances change any time after you submit the application, which is entirely possible, then there is a provision for you to provide your new details.
How To Receive Your Loan Funds
After submitting the FAFSA, you will receive a financial aid award letter either by email or post. This is usually sent by the individual’s financial aid office and includes details of the various types of financial aid offered to you. If you are happy with the package put together, you can get in touch with the college’s financial aid offer informing them that you accept.
Before you can receive any of the funds awarded to you, you will have to complete a mandatory entrance counseling session. Entrance counseling is designed to educate student borrowers about how the loan works and their obligation to pay back the loan.
After you’ve completed the entrance counseling, you will be asked to sign a Master Promissory Note or MPN, agreeing to the terms of the loan.
Understand The Different Types Of Federal Student Loans
There are a few different options when it comes to federal student loans, and it’s important to know the details of them.
- Direct Subsidized Loans – Undergraduate students who demonstrate financial need can pursue these loans. The big advantage here is that the interest is paid by the federal government while the student is still in college. Perkins Loans and Stafford Loans, both come under this category.
- Direct Unsubsidized Loans – All undergraduate and graduate students can look into Direct Unsubsidized Loans. Demonstrated financial need is not a criterion. Unsubsidized Stafford Loans come under this category.
- Direct PLUS Loans – These are slightly different in that they are not available to undergrad students. Only graduate students, professional students and parents of dependent undergraduate students can apply for these PLUS Loans to help pay for those education costs not covered by other financial aid. Another difference is that the borrower’s credit history is a factor in getting approval.
Before taking any student loan, federal or private, it is important to do your research, and understand the terms and conditions of the different types of loans as well your payment obligations in order to prevent disastrous debt-related problems later.
And if federal student loans and scholarships don’t cover the entire cost, you need to find the right private loan. Use College Raptor’s Student Loan Finder to compare lenders and interest rates—for FREE!