Student loans can be one of the most important aspects of your education and one of the most confusing and complex parts of your financial life.
So before applying for loans for students, make sure you’re fully prepared to do so by following these steps to apply for student loans so that you don’t end up paying too much in interest or taking on more debt than you can handle.
8 Common Steps to Filling Out Loans for Students
Some may think that you just Fill out the FAFSA form, Find the right school, and just Consider your career path. But, the steps are a bit more involved. They include:
- Check the eligibility criteria set by your school, including your qualifications and whether or not you will require a loan.
- Fill out the Free Application for Federal Student Aid (FAFSA)
- Check your eligibility
- Appear in person at a lender with your identity and income documents
- Complete a loan application
- Sign an entrance counseling video
- Read and sign the promissory note
- Check interest rates
After following these steps, you’ll be ready to apply for student loans. Of course, there are many more that you can take when it comes to paying back the loan, but this is just about getting the money in the first place.
Know How Much You Need
You should figure out how much you’ll need to cover your costs by determining your total annual expenses and any other one-time expenses.
Compare Your Options
Before deciding which student loan program is best for you, it’s important to compare your options. Here are a few things to consider when comparing loans:
The interest rate on the loan determines how much money you will end up paying back over time. Lower interest rates typically mean lower monthly payments and higher total interest paid over the life of the loan.
Types of repayment plans can help make monthly payments more manageable. These include income-driven repayment plans and Public Service Loan Forgiveness programs that allow you to have your loans forgiven after ten years if you work in public service. Repayment periods vary from 10 to 30 years, depending on the type of loan.
Estimate the Cost of Attendance
Get your Free Application for Federal Student Aid (FAFSA), then use the Financial Aid Estimator to help estimate your financial aid eligibility. First, enter your family income and education information, and then press Calculate. The calculator will then show you an estimated amount of money you might be eligible for.
Calculate Your Eligibility and Expected Family Contribution (EFC)
You can determine your eligibility and expected family contribution by using the government’s Federal Student Aid Eligibility Calculator, which is available on the FAFSA website. According to Ascent Funding, “There are two categories that are taken into account when determining eligibility: Cost of Attendance (COA) and Expected Family Contribution (EFC).”
Understand Repayment Plans
Decide what type of repayment plan you want (Income-Based Repayment, Pay As You Earn, or Standard). Income-Based Repayment only requires that you make payments equal to what you’d spend on a certain percentage of your discretionary income.
Pay As You Earn – limits the monthly payment to 10% of your discretionary income and forgives any remaining debt after 20 years of repayment. Standard – with this option, borrowers can apply for forbearance if they cannot afford their monthly payments.
Where to Get Help with Applying
Students can go to their school’s financial aid office and complete the necessary paperwork. Students can also contact lenders directly to find the best loans for them.
Use the Right Resources
Use the government’s student loan estimator to determine how much you may be eligible to borrow. Then, check with your college’s financial aid office. They will guide you through the application process and send your information to lenders on your behalf.
Check Other Details Before Signing on the Dotted Line
Before you sign on to any loans, check out your repayment options with your school’s financial aid office. For example, You may find that an income-based repayment program suits your needs better than a traditional fixed payment plan.
It’s important to stay in contact with your lender and keep track of your application status. If you find a college loan incorrectly reported on your credit report, you can dispute it by contacting one of these agencies.
