Student Loan Help

The topic of student loans is not as complicated as some people often imagine it to be. Simply said, student loans are funds that students can borrow to pursue a college education and repay later when they are productively employed.

The key words are funds, college, borrow, and repay. Funds are available and may be obtained from a variety of sources – the federal or state government, private banks, and other lending companies. The borrowed funds are intended as the means whereby a student can cover the expenses related to his or her college education. Since these are borrowed funds, they are to be repaid by the student at some later date, usually after graduation.

These are the ABCs of Student Loans

Below and in the succeeding pages, we’ll discuss the other intricacies of student loans through a question and answer primer:

• 1. What course can I take to avail of student loans? All courses of at least one-year duration and duly recognized by the U.S. Department of Education. These include regular bachelor’s degree, special courses (computer, commercial pilot training, fashion design, etc.), and post-graduate courses, like MBA, MA, and PhD.
• 2. What expenses are covered by student loans? Student loans can cover tuition, miscellaneous fees, laboratory fees, room and board, cafeteria, books, computer, and other related expenses.
• 3. Who are eligible for an educational loan? The first and foremost eligibility requirement is your readiness to enroll in college, which means you must have the following qualifications:
• A high school diploma or a General Education Development (GED) certification.
• You must pass a government certified ability-to-benefit test.
• If you don’t have a high school diploma or GED, or have not passed an ATB test, you may be still eligible to apply for a student financial if you earn the equivalent of six units in the college you wish to enroll in. However, you are not entitled to receive financial aid for the six units.
• Aside from educational requirement, you must also be a citizen of the United States or a permanent resident.
• You must have your own valid Social Security Number.
• 4. What is the maximum amount that can be availed under educational loans? If you want to avail of federal funded student loans, you need to fill up the FAFSA or Free Application for Federal Student Aid for evaluation. The loan amount is need-based, not on your creditworthiness. If the loan amount awarded to you is insufficient, you can turn to private student lenders for more funds. It is strongly recommended that you exhaust all possibilities from federal based funds before turning to a private lender. Your school of choice can recommend other possible sources of loan funds for your college education.
• 5. How does FAFSA determine my eligibility for certain loan programs? Your eligibility for various programs with federal funding will be based on how you filled up the FEFSA form. Using the information you indicate at FAFSA, evaluators will determine your financial need and expected family contribution (EFC) to determine your eligibility for federal student assistance and the amount it will award to you.
• 6. When is a good time to submit my FAFSA application? If you’re looking at school year 2012-2013, you can submit your application on the first working day of January 2012. The earlier you submit your application, the better for you. The best programs are exhausted first, specifically grants. If you procrastinate in submitting your application, you may not be able to get them anymore. Deadline for submission is June 30, 2012.
• 7. Do I need to inform my school of choice about FAFSA? Yes. In fact, you need to be sure that you meet the requirements of your school or schools of choice in terms of their minimum requirements. You need to follow their instructions as well to ensure that you get the financial aid that you wish.
• 8. How will I know the status of my application? You will receive a notification from FAFSA in the form of Student Aid Report (SAR) within two weeks from receipt of your FAFSA application, but if you indicated an email address, you can receive your SAR in four to five days.
• 9. What is SAR? The SAR is an important component of your student loan application process. Once you have it, you need to review it for accuracy. It contains all the data in your FAFSA. If you have corrections or changes or additional information you wish to include, this is the best time submit them.
• 10. How will I know that I will be receiving financial aid? The school you listed on FAFSA as your school of choice will send you an award letter, usually by email. The award letter provides the specifics of the awards, including the type of award and the financial aid you will receive.
• 11. What security can I offer for the loan? Federal loans do not need security. They are awarded to you based on your financial need. When seeking student loan from a private lender, you need a cosigner with good credit record.
• 12. What are the documents needed to apply for student loan? If you’re applying for a federal loan, you need attachment to support your financial need. If you’re a dependent of your parents, you need to enclose their ITR, bills, medical expenses, and similar supporting documents to enable FEFSA evaluators to determine your eligibility for financial aid. In the event that you will turn to a private student lender, you will need a cosigner, usually your parents.

Below is the list of documents you need to prepare for FAFSA:

• Social Security Number
• Driver’s license, if any
• 2010 W-2 forms and other records of money earned
• 2010 Federal ITR
• Foreign Tax Return
• Parents’ 2010 Federal ITR, if you are a dependent student
• Latest untaxed income records
• Current bank statements
• Investment records
• Your alien registration certificate or permanent resident card, if you are not a U.S. citizen
• Medical bills, utility bills, and other proofs of expenses
• 13. What are the interest rates for educational loans and how are they calculated? The standard fixed rates for now are between 3.4% and 6.8% based on the loan program assigned to you. It’s usually more for private lenders.
• 14. When do I start paying for my student loan? If you’ve qualified for subsidized federal loans, like Perkins and Stafford, you will start paying around six months after graduation. This is because the federal government has absorbed the interest rates during the four years that you will be in school. If you request for deferral, the start of your payment will once again be moved without interest. If your loan is unsubsidized, the interest rate will apply as soon as your loan is released. You may or may not pay for the interest immediately, but it’s to your advantage to pay interest charges as they are applied as they accumulate over the years and become part of your loan principal.
• 15. Why are cosigners required? A cosigner is your guarantor if you decide to take out a loan from a private student lender. If an applicant fails to repay the loan, it’s the cosigner, usually a parent, who absorbs the debt.
• 16. What are the types of federal student financial aid? They are grants, work-study, and loan. A grant is outright free school assistance because it does have to be paid unless, of course, you withdraw from college. Work-study is another form of financial assistance for students who allows them to earn money while working and studying. A student can work in his/her school as a library assistant, for example, with the government for the salary.
• 17. What are the types of federal grant offered by the federal government? These are Federal Supplemental Education Opportunity Grant (FSEOG), Federal Pell Grant, Teacher Education Assistance for College and Higher Education (TEACH) Grant, and the Iraq and Afghanistan Service Grant for American veterans and their children. These grants are awarded to students under specific terms.

More Student Loan Help Sources

• Paying Student Loans
• Student Loan Debt Relief
• Student Loan Consolidation Companies
• Private Student Loan without Cosignor
• FAFSA Student Loans

Almost anyone who asks for government financial aid to help covers the cost of college education is given a form of assistance by the government as long as the documentation is complete and there is no attempt of gross misrepresentation of facts.

The financial aid comes in form of grants, work-study, and loans, costing billions of dollars for the government in an ambitious bid to help every eligible American realize the dream of equal opportunities in education and a better future for him or him and his or her family and loved ones.

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