Pre Approval Student Loans

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What type of student loan do I qualify for?

There are three types of loans that students may apply for and they are: Direct Subsidized Loan (Parent/Guardian PLUS), Direct Unsubsidized Loan, and GradPLUS Student Loan.

Direct Subsidized Loan – A direct subsidized student loan allows parents, guardians, and spouses of eligible undergraduate students to borrow money at 0%-5% interest. Eligible borrowers must have completed their first year of college attendance at least half time (or 12 credit hours per semester), meet certain financial need criteria, and enroll directly in an eligible program at participating schools.

Direct Unsubsidized Loan – A parent/guardian’s unsecured federal education loan does not receive any government subsidies. If a borrower makes 120 monthly payments on the loan, he or she will pay no interest for the duration of repayment.

GradPLUS Student Loan – Borrowers who attend postsecondary institutions after January 1, 2014 and graduate before July 1, 2018 are eligible for a 10-year fixed rate, renewable term GraduatePLUS loan. GradPLUS loans cannot be consolidated with any other federal student loan. Students may only borrow a maximum of $31,000 total over the course of their baccalaureate degree, excluding room and board. The loan amount includes room and board costs. Loan eligibility is determined using the Free Application for Federal Student Aid (FAFSA).

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When should I start looking into these loans?

The best time to look into student loans is when you are about to begin school. Most schools require a FAFSA application, which will tell you what programs are eligible for assistance, how much aid you will receive, and if you qualify for any grants. You will get information on your own personal financial situation and know how much of a burden the loan will be on your family budget.

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How long until my loans are approved?

Based on your income, you could be approved for a loan immediately after submitting your FAFSA. However, many students wait until closer to graduation to submit their applications, which means that they won’t be able to use the funds right away. In order to make sure you still have enough money to cover rent and bills while you’re attending school, you’ll want to consider borrowing additional funds at a later date.

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What happens if my loan isn’t approved?

If your loan is denied, it’s possible that you might be able to apply with a lower debt-to-income ratio or even request a deferment. There are different options for different situations.

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Where should I go to find out more about student loans?

To learn more about student loans, check out www.StudentLoans.gov.

Pre Approval Student Loans

Federal Education Loan (FEL)

A federal education loan is similar to a bank loan except it is given directly to the student rather than the school. The student’s income is not considered when applying for these loans and they do not have to pay them back until after graduating college or receiving their degree. These loans are issued by the government and then sold to private banks and investors. Private banks and investors can lend money to students based off of their credit score and other factors related to their personal financial situation. The interest rate on FEL loans ranges from 2% to 6% depending on what type of loan the student receives. Students who receive Stafford loans (loans backed by the Sallie Mae company) receive higher rates at 6%.

Direct Subsidized Loan

Direct subsidized loans are federally guaranteed loans. They are offered to low-income college students and are paid back by the U.S. Government after graduation. The amount borrowed is determined by the school the student attends. The interest rate for direct subsidized loans varies between 0% and 4%, and sometimes lower if the student is in certain circumstances. The maximum amount a student may borrow per year is $32,500.

Direct Unsubsidized Loan

Direct unsubsidized loans are generally issued by private lenders to high-income students. There are two types – fixed and variable. Fixed unsubsidized loans offer a set payment each month regardless of how much is borrowed, while variable unsubsidized loans vary based on the cost of living or tuition costs. Interest rates for direct unsubsidized loans range from 5.8% to 8%.

Perkins Loan

Perkins loan is a direct loan given to low-income college applicants. Like a scholarship, Perkins loan offers free tuition to those who qualify. To receive Perkins loans, students must live in the United States and be accepted into any eligible undergraduate program at a public university. The minimum level of family income that qualifies for the loan is $65,000. The interest rate on Perkins loans varies between 1% and 9%, depending on the amount of debt incurred. Perkins loans are funded by the Department of Agriculture and administered at each individual state campus.

PLUS Loan

The Public Service Loan Forgiveness Program is a federal loan forgiveness plan. Under this program, approved borrowers can choose to have their remaining balance forgiven after 10 years of payments. The qualifying criteria for the program is 150% of the discretionary income limit (DIL). DIL is the total sum of the borrower’s adjusted gross household income and his or her spouse’s adjusted gross household income minus 100% of the poverty threshold. The current DIL is $57,600 for 2018. The DIL is automatically adjusted annually by Congress.

Pre Approval Student Loans

How long does it take to file for student loans?

To apply for federal student loans you need to complete the FAFSA (Free Application for Federal Student Aid) at www.fafsa.gov/. You can begin filling out the application anytime after January 1st each year. If you’re applying for private student loans, you’ll have to complete their own forms and submit them before they issue a loan check. Typically, getting approved for a loan takes about 4 weeks. However, if you qualify for an award letter from the school you attend, then you could get a faster decision.

What’s the difference between Stafford loans and Pell grants?

The two types of government-backed student loans are called Stafford Loans and Pell Grants. Both loans are federally backed, meaning the US Government backs them both 100%. But the repayment terms are different. A Stafford Loan, which is what most students get, has fixed monthly payments over 10 years. And the interest rate varies depending on when you took out the loan. After 5 years, you may start paying 2% less in interest per year. But after 20 years, the interest rates go back to 6.8%, and after 25 years, the interest rates jump to 8.5%. So if you get out early, you’ll pay more interest over time. On the flip side, a Pell Grant has no fixed payment term and the interest rate is fixed at zero percent. Pell Grants don’t require any credit checks either!

Is there anything else I should know about these loans?

Keep reading…

There are some things you need to know that aren’t listed on the above website. First off, make sure you only borrow what you really need. Just because your friends got theirs doesn’t mean you should as well. Always read the fine print carefully and never sign something without understanding it first. Also, never assume that just because someone has a degree in a certain field means they have good financial sense. Degrees are great, but they’ve been known to mislead people. Lastly, make sure you understand how much money you can borrow. Don’t get carried away with student loans, because the last thing you want is to lose control over your finances later down the road.

Pre Approval Student Loans

*Disclaimer* I do not suggest taking out student loans. There are plenty of free or low cost resources for students who need money. You should only take on debt if you have the skills and means to repay it. If you are looking for a loan in order to attend school then apply at the school’s financial aid office before attending a private lender. In some cases they may give you a grant instead of lending you the money.

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Pre Approval Student Loans

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