Federal education loans can be your key to a college education. Get advice from any undergraduate or graduate and they’ll probably mention the high cost of college. Of course, there are ways to keep college affordable. If your folks are able to pay your tuition out-of-pocket, the price of college might be the last thing on your mind. But for the majority of people enrolling in college, cost is a major issue, and without federal education loans, they wouldn’t be able to step foot inside a classroom.
Federal education loans are a popular choice because they’re available to just about anyone. Not to suggest that you’ll qualify for every federal program available. But regardless of your financial need, income or credit history, completing a Free Application for Financial Student Aid (FAFSA) can match you with the right program.
If you decide to complete an application for a federal student loan, here are four simple tips to help you along the way.
1. Borrow only what you need.
Understand that a federal education loan is not a grant, scholarship or other free money. This is a loan, and like any other loan, you have to repay your student loan lender. For this matter, only borrow what you need for your education. After you’ve been approved for a federal student loan, you will receive an award letter in the mail. This letter states how much you’re eligible to receive for college-related expenses. However, you do not have to accept the full amount. If your parents will contribute to your educational costs, or if you plan to work part-time while in school, borrow a limited amount and pay any remaining balance yourself.
2. Know the deadlines.
Don’t wait until the last minute to apply for federal education loans. With regards to student financial aid, there are deadlines. Plus, some loan programs receive a limited amount of funds each year. If you delay submitting your application, you might miss the opportunity to receive aid.
The first step in applying for a student loan is completing a FAFSA. The deadline for applications is typically around the end of June and the beginning of July each year. Ideally, you should submit your application near the beginning of each year. This will ensure that you receive funds to pay your educational costs for the new school year.
3. Make sure that you understand the loan terms.
Federal student loans differ. For example, some loans are subsidized, in which the federal government pays the interest on the loan while you’re in school. Deferments periods and interest rates vary depending on the type of loan. Plus, some loans are only available to certain types of students. Entrance counseling is customary when receiving federal financial aid. This is where you sign a promissory note agreeing to repay the loan and a financial aid counselor explains the terms of your loan. Pay attention in this meeting. Ask questions for clarification, and only sign the promissory note if you’re comfortable with the loan terms.
4. Make-in school payments.
Undergraduates and graduates who receive a federal student loan are not required to make payments while in school, although interest may accrue during this deferment period. Because the balance on a student loan can grow quickly, consider making periodic in-school payments – even if you only the pay the new interest charges. This can greatly reduce how much you owe after graduation.