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Getting a Loan for School
The vast majority of students pay for their higher education with at least one loan for school. You need to take a good look at the loan options available to you before you accept the first loan application handed to you in the financial aid office. There are federal and private loans available to you based on need, want and credit rating. Having a decent amount of understanding of the process puts you in the position of getting a great deal rather than a mediocre one.
Federal Loan for School
Getting a federal loan for school does not require any credit check. You basically have to fill out the form with your financial and educational information and wait for the loan to be disbursed. Traditionally, you have to apply for federal loans using the FAFSA application online or on paper. You can, however, apply for the federal loans individually if you missed the FAFSA deadline. There are few types of federal loan school programs:
Stafford – these loans are provided by the government through the Direct loan school program and through the FFEL program which goes through private financial institutions. You can choose a subsidized or unsubsidized loan based on your financial need. You have to repay these loans if you drop below half time status or after graduating. The grace period is six months and you can consolidate these loans during that time. To be eligible for Stafford loans you have to be a US citizen or eligible permanent resident, have a high school diploma or GED and be enrolled at least half time in an undergraduate, graduate or professional degree program. You cannot get these loans if you are in default on any other types of loans.
Perkins – this loan is provided by the government through private financial institutions. They are directed to students who have demonstrated financial need (so it is subsidized) and have limited funding. They are provided on a first come first served basis so you have to apply early to be sure you get the funding you need. The grace period on this loan for school is nine months, during which time the loan can be consolidated. To be eligible for Perkins loans you have to be a US citizen or eligible permanent resident, have a high school diploma or GED and be enrolled at least half time in an undergraduate, graduate or professional degree program. You cannot get these loans if you are in default on any other types of loans.
Private loan – you can seek private loans if you do not qualify for federal loan school aid or if you need supplementary school loan aid. These loans are credit based which means the better credit you or your cosigner have, the better deal and more money you can get. These loans have varying interest rates and repayment terms. Generally, they can be consolidated but should always be consolidated separately from federal loans so that you do not lose the benefits of deferring payments on the federal loans.
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