Student Loan – Make College More Affordable
Student Loans provide many individuals with an accessible route into college by making monthly payments on principal and interest. Unlike other types of loans, however, this commitment doesn’t end when graduation occurs or enrollment drops below half-time status.
When your repayment begins, these are the companies to contact.
Direct Subsidized Loans
Direct Subsidized Loans are federal student loans for undergraduate students with financial need. The government pays the interest while you attend at least half-time as well as during any periods of deferment or forbearance. To be eligible to receive Direct Subsidized Loans and other federal student aid programs, an FAFSA form must be filled out online and submitted in its entirety. Your loan award each year depends on several factors, including cost of attendance, estimated family contributions, and academic grade level. For instance, graduating seniors can use the Department of Education to prorate their loan award based on how many credit hours are expected in subsequent fall and spring semesters.
Your federal student loan eligibility could include Direct Subsidized and Unsubsidized loans if eligible, determined by results from your FAFSA form. Each year the financial aid office will use these results to establish how much of a loan amount you may borrow each year.
Undergraduate first-year undergraduate students can borrow up to $5,500 total between subsidized and unsubsidized loan funds combined; independent students or dependent students not qualifying for PLUS loans may borrow an additional $9,500 maximum loan total. Direct Subsidized Loans can only be borrowed up to 150% of your program length over six years (maximum), however past loans will count toward your current maximum. After your loan award has been processed, the next step will be signing a Master Promissory Note that commits you to repay what you borrowed. Furthermore, entrance counseling will help you understand your responsibilities and repayment options; repayment will start six months after graduation or drop below half-time enrollment.
Federal student loans provide protections and benefits that private student loans don’t. Before refinancing federal student loans into private ones, carefully evaluate all of your options. Contact your loan servicer and see if there are ways they could reduce payments or extend loan terms; do this by logging into your student account and visiting “Manage My Loans.”
Direct Unsubsidized Loans
Higher education costs continue to skyrocket and more students than ever are turning to borrowing to cover them. Luckily, low-interest rates, flexible repayment options, and deferment and forbearance programs exist so students can borrow Federal direct subsidized or unsubsidized loans; though both must be repaid with interest; with subsidized loans, the government pays the interest during enrollment at least half-time and during the six month grace period after leaving school.
Direct Subsidized Loans (DSLs) are only available to undergraduate students who demonstrate financial need as demonstrated by their FAFSA results. The Department of Education will pay the interest on your subsidized loan while you are in school and during any deferment or forbearance periods; once you leave school however, this interest begins accruing and will be added back onto your principal balance amount of your loan.
Unsubsidized loans put you in charge of paying any and all interest from the moment it’s disbursed until it’s fully repaid, without needing to demonstrate financial need first. Graduate and professional students eligible for unsubsidized loans don’t need to demonstrate this type of financial need before being awarded one; their Award Letter on SalukiNet will show this loan amount, so either accept it by selecting “Accept”, or decline it using the dropdown menu on that same page.
Once you’ve accepted either subsidized or unsubsidized loans, it is essential to complete online entrance counseling and exit counseling sessions to make sure you fully comprehend the terms and responsibilities associated with borrowing and repaying these funds. In addition, an online Master Promissory Note will need to be signed.
Your total annual borrowing limit is calculated based on your cost of attendance minus any financial aid awards received. Each year you must reapply for federal student loans by filling out and submitting the FAFSA, meeting eligibility requirements, and fulfilling all prerequisites. In addition to federal direct subsidized and unsubsidized loans, there may also be options available through private or alternative lenders.
The Federal Direct PLUS Loan is a credit-based loan program for dependent undergraduate and graduate/professional students whose parents wish to borrow up to the cost of attendance minus other financial aid received. Each parent borrower determines how much they wish to borrow up to their school’s cost of attendance minus any available financial aid awards. Parent borrowers are responsible for repaying PLUS Loans at their own expense; interest rates and an origination fee of 4.228% are set by the federal government. Parents who take out PLUS loans for their students who enroll at least half time are given the option of deferring repayment until either graduation or dropping below half-time status has occurred; borrowers are strongly advised to make as many payments towards debt while in school as well as consider alternative repayment solutions such as loan forgiveness.
As part of the application process for a PLUS loan, parents are required to complete and sign a Master Promissory Note (MPN), followed by a soft credit check. The MPN remains on file for 10 years after it is signed; thus eliminating the need to resign every year unless circumstances have altered significantly.
Because the Federal Direct PLUS Loan is a credit-based student loan, it may not be made available to those with adverse credit histories. According to the government definition of adverse credit history: having more than $2,085 that is 90 days past due; recently discharging bankruptcy within five years; outstanding judgment against you; tax lien; wage garnishment; foreclosure proceedings or default on federal student aid loan(s).
The Federal Direct PLUS Loan can be paid back over up to 30 years, depending on the length of repayment plan chosen by borrowers. Repayment begins 60 days post-final disbursement of loan funds and includes both principal and interest payments. To learn more about your options for repaying this loan visit the Department of Education’s website; additionally, entrance counseling must be completed prior to first disbursement via the Federal Student Aid website.
Many colleges provide private educational loan programs for their students and families to help cover college costs. Funds may come from sources including alumni, foundations, donors, or repayments from prior student borrowers; institutional loans don’t rely on federal financial aid eligibility and may be used for tuition, living expenses, study abroad programs, or internships – up to cost of attendance minus other financial aid received minus loan limits set by school and terms may differ between loans; they often feature fixed interest rates with no application fee and deferment options while still in school or after graduation.
Many private student loans are disbursed either through a school channel or directly-to-consumer lender. With school channel lenders, students must present enrollment verification to apply loan funds against their cost of attendance; direct-to-consumer lenders offer faster application processes but often come with higher fees and interest rates.
Before applying to any lender – whether school-channel or direct-to-consumer – always carefully consider the total cost of their loan application process. Take into account other forms of financial aid received and do not borrow more than necessary – any extra borrowing could add up quickly in interest later.
While it is possible to obtain a private student loan with poor credit, it’s essential to research all options prior to beginning. An income-driven repayment plan where payments will be calculated as a percentage of discretionary income rather than principal and interest amounts could help keep debt at a manageable level and help prevent defaulting on student loans. Nerdwallet provides a list of lenders offering this payment option; regardless of your choice though, make your monthly loan payments on time to avoid late fees or penalties and keep all loan obligations current at all times!