Before you apply for a study loan, consider applying for a fully-funded scholarship! Who knows you may win a highly funded scholarship to sponsor your studies with a monthly living allowance and accommodation in any top-ranked university!
Internet carries a lot of information that is beneficial for students. Such data includes essay reviewers, information about colleges, tips on how to be better at school. But today’s article will be about another vital part of your college journey – a guide to student loans.
Nowadays education is expensive. One should either need to have parents who had saved a lot or put forward an application for a student loan. It is also very unlikely that one will manage to work enough to pay for college for only a small percentage of people can deal both with full-time jobs and classes. Thus, student loans are highly going up in popularity. This is why we are dedicating them a throughout review.
Types of student loans
It would be impossible to cover or to list all the student loans that are available out there, but you can take the ones mentioned below as examples to get you an idea.
In Europe, you can find the Erasmus+ Masters loans scheme that provides EU support for bank loans up to 12,000 EUR for a one-year Master’s degree, or up to 18,000 EUR for a two-year programme.
In the US, you can apply for federal loans (supported by the federal government) that have flexible repayment terms, benefits, options and low-interest rates.
How to Apply for 2023 Student Loans
Repayment of the student loan
The repayment usually starts within six months after the completion of the degree, also called the grace period. Depending on the amount of the loan, it is requested that you repay the loan within 5 to 10 years, although in certain European countries, you can repay it in 15 years.
If you have taken out a student loan to cover tuition fees, you only have to repay the loan after you finish your studies and start earning a certain level of income, called the ‘repayment threshold’. For example, in the UK, you can borrow 8,200 GBP, but have to repay this sum once you earn more than 21,000 GBP/year after graduation.
Why International Student Loans?
Studying overseas is expensive, and many students struggle to fund their international studies. Scholarships and grants are available, but they are very competitive and rarely cover all of your expenses.
A loan can cover up to the total cost of attendance, as determined by your school, minus any other aid received.
Here are just a few of the costs your international student loan can cover: Tuition, Room and Board, Books, Travel, Health Insurance, and Living Expenses.
Fill the FAFSA Form
This abbreviation signifies the Free Application for Federal Student Aid form. It requires answers in topics of your and your parents’ incomes and investments. Also, it will ask you to fill in whether your parents have more than one child in a college at the same time. Then a specific number is calculated – Expected Family Contribution – aka. what money that the government thinks your parents shall manage to pay for college on their own resources.
This specific form can be filled in online, at the website of the Federal Student Aid. For time-saving, have all the information with yourself prior to sitting down to fill the form out. FAFSA should be filled the first time you apply, as well as any subsequent year for those who want to continue being a recipient of the aid.
Compare the Offers
FAFSA information is used by colleges to base the aid available on. They compare how much is your EFC in respect to what is the cost of attendance at that college. The COA will include the tuition, the fees that you need to pay, the room and board, as well as some amount for other expenses. Generally, the websites of the colleges show what that number is.
Colleges create a specific package to fill the gap between the COA is and the amount you are able to pay on your own. That package can include federal grants and loans. Grants usually don’t require payback, with the exception of very rare cases. They are reserved for those in an “exceptional financial need”.
Think about the loans different colleges offer and whether they are unsubsidized, or subsidized.
Direct subsidized loans are in place for ones with an exceptional financial need. The US Department of Education pays for the interest while you are studying, as well as during the first six months after graduation.
Contrary, direct unsubsidized loans can be taken regardless what is the financial situation of your family, and they start accumulating interest right away.
For those who have qualified, colleges may offer both types of loans.
Federal loans would usually be the better option compared to such from banks or private parties. They have a lower interest which will be fixed. The private, on other hand, give variable rates. Most often, the federal loans come with flexible plans for how you are going to repay them.
But there is a limited amount that one is allowed to borrow at once and in total. If you need more than that amount, you can go for a Federal Direct PLUS Loan.
Consider Private Loans
If your need is higher than what the federal loan offers, you can think about private student loans. That can come can come from a bank, from a credit union, or from other financial institutions.
For private loans, one does not need to have specific financial needs. They need their own forms to be filled. Usually, when one wants to apply for such a loan, they will need a good credit score or they will need to have a cosigner who is with a good credit rating.
Private loans come with more of an interest and a variable one, as well. Thus, it can mean you won’t be certain how much you will need to pay in the end. Also, the private ones are don’t come with a flexible plan for repayment. But they can be refinanced after graduation.
The colleges will inform their applicants what amount can they borrow at the time they receive the acceptance letter. In many cases, there are specific funds available from the college itself in the form of athletic or merit scholarships.
School Choosing Factor
One factor that is of big importance is what amount you will need to borrow for attending the particular colleges you’ve picked. The debt after graduating may prove to be a huge thing that you will need to deal with. This may put some limitations on the choices you make about life and career. So, one large factor that you need to think about is how much you are willing to pay.
Programs for Forgiveness of Student Loans
Public Service Loan Forgiveness – that is a plan that forgives the accumulated debt if you work 10 years for some public service. That program grants forgiveness on various student loans after 120 payments which correspond to 10 years. The options for public service are many – it can include employment with government agencies, organizations, or not-for-profit organizations designated as tax-exempt. An important moment is that it is a must to work for the actual firm, rather than being on a sub-contract.
Some common jobs that can be qualified are government workers, emergency management, military service, law enforcement, public safety, public health services, teachers, school workers, and educators, etc.
Volunteer Work Loan Forgiveness – some organizations that are for volunteers offer money that can then be put in towards the acquired from student loans debt. For instance, Peace Corps gives you a partial Perkins Loans cancellation based on how many years you’ve served.
Teacher Student Loan Forgiveness – five complete consecutive academic years spent working for specific elementary and/or secondary schools of educational agencies that work towards low-income families, and a few other requirements covered, may enable you to get a partial student loan cancellation of Direct, Stafford, or Perkins Loans.
Student Loans Cancellation
Those with total and permanent disabilities can be forgiven for their student debt.
One such option is provided to those who are veterans and have disabilities due to the service. Also, for those who are on Social Security Disability Insurance or Supplemental Security Income, partial discharge gives you the cancellation of the debt.
Another option is to submit a physician-given certificate that you are completely and permanently disabled.
Student Loan Refinancing
This way you can gather the Federal and the private student loans into a single payment, but you will have a new interest rate that sometimes can be lower. Here you are taking a new loan with which you can pay off the old ones. The new loan, though, is through a private party.
Federal Loans vs Private Loans
When it is about federal vs private loans, we always recommend the first type. They are usually come with fewer costs and are easier to repay. On the other hand, when you are dealing with a private one, you will have less flexibility and will need to spend more on the payment.
The federal ones come subsidized. They give you fixed interest rates and cover many of those in need. They are also with more flexible terms. But when it is about the private one, it should be noted that with them one is able to make more money. If you show that you have a good ability to repay, the interest can be quite good.
Whereas with federal loans you are limited in the amount of money you can borrow. Also, the government is eligible to take part of your wages, as well as your whole tax refund in particular loan plans. On a different note, with private study loans, you can have your interest rate and monthly payment charged unexpectedly. There are also fewer options for the time and the cost of repayment. Usually one would also need a co-signer to apply for private loans.
There are, of course, other types of plans and offers that we haven’t covered, but we did try to show you the most important parts and aspects of the process of applying for a student loan. There are various options, and you need to calculate what the cost is, as well as how you’ll be able to pay the debt off. Multiple things need to be considered. The money part of applying to colleges is not the most important one, but it sure is somewhere within the top considerations. So, make sure you have thought everything through.