Planning for college involves more than deciding where to attend school. College tuition has skyrocketed in recent years and, for many students and parents, college planning is all about where to get a student loan before the fall semester begins.
Being able to attend college without the help of a student loan is a major plus. This alleviates costly debt after graduation, which can make the transition from college to real world a bit easier. But unfortunately, most people who attend college need financial help. And since scholarships and grants are only available to select applicants, student loans are the next best alternative.
Of course, to take advantage of this type of aid, you have to know where to get a student loan.
1. Federal Student Loans
If you need financial help to attend college, start with federal student loans. These low-interest loans are available to undergraduates, graduates and parents. Eligibility differs depending on the type of aid, however, there is something for everyone. Options include:
- Subsidized Direct Loans: This federal student loan is available to undergraduates with a financial need. To be eligible, students must be enrolled in school at least half time. There are yearly loan limits that range from $5,500 the first year to $7,500 the third year. The interest rate is currently 3.4%. Because the loan is subsidized, interest is paid by the federal government. Loan repayment begins six month after graduation.
- Unsubsidized Direct Loan: Fortunately, federal loans aren’t only available to those with a financial need. Unsubsidized loans are available to graduate and undergraduate students regardless of financial needs. Yearly limits range from $9,500 to $20,500 per year for undergraduates and graduates, respectively. These loans have a fixed 6.8% interest rate. Although loan repayment doesn’t begin until six months after graduation, interest does accrue during deferment. Interest is not paid by the federal government.
- Perkins Loans: Undergraduates, graduates and professional degree students with a significant financial need may qualify for a Perkins Loan. Loan limits range from $5,500 a year for undergraduates and $8,000 a year for graduate students, and the current interest rate is fixed at 5%. To qualify, students must attend a college or university that participates in the Perkins Loan program. Participating schools receive a certain amount of funds each year, and these schools determine how much an eligible student receive.
- Direct PLUS Loans. Parents of dependent students, as well as non-dependent graduate and professional degree students can apply for federal PLUS loans. Unlike other types of federal aid, PLUS loans do require a credit check, and approval is based on an applicant’s credit history. If approved, these loans feature a current interest rate of 7.9%. For parents, repayment begins as soon as funds are disbursed. However, graduate students can defer repayment until six months after graduation.
To begin the process for a federal student loan, complete a Free Application for Federal Student Aid.
2. Private Student Loans
Federal student loans are popular, but these aren’t your only options when considering where to get a student loan. The deadline to submit a FAFSA application for the fall semester is June 30. If you miss this deadline, you can apply for private student loans. These are not federal loans, but rather loans offered by banks.
Getting a private student loan isn’t as easy as federal funding, as banks require a credit and income check. If you’re a student with no credit history or sufficient income, approval will require a cosigner. The interest rate on a private loan varies by lender. Additionally, deferment is not offered by some private lenders, thus repayment begins as soon as funds are disbursed.