Student Loans for Ohio Students
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The lender of choice for Ohio was formerly a company called Student Lending Works, an agency created by the state of Ohio which used to make discounted federal student loans available to Ohio students. That line of business ended as of July 1, 2010, when the federal government transferred all its funding to direct lending. Ohio students can still take out the standard federal loans, but the federal government now serves as the lender.
Federal Loans For Ohio Students
Both federal student loan programs, the William D. Ford Federal Direct Loan Program (“Direct Loans”) and the Federal Perkins Loan Program (“Perkins Loans”), are handled by the U.S. Department of Education (USDOE).
Eligibility For Federal Financial Aid
In an effort to remain consistent, the USDOE has established a single set of basic criteria that apply to all types of financial aid it disburses. Here they are:
- For most programs, you must show financial need (for which purpose you’ll fill out a Free Application for Federal Student Aid, or FAFSA)
- You must be either a U. S. citizen or an eligible noncitizen with a current Social Security number
- You must register with Selective Service if legally required to do so
- You must be enrolled in an eligible degree/certificate-granting program at least half-time, making satisfactory progress in school, and
- You must show you’re qualified for college (for example, by obtaining a high school diploma).
Direct Subsidized And Unsubsidized Loans
Because Direct Subsidized loans are designed for students who have financial need, their terms are somewhat more favorable than those for Direct Unsubsidized Loans. For both types of loan, your school’s financial aid office decides how much you need to borrow with respect to your educational costs. Subsidized loans are for undergraduates only, but the USDOE makes unsubsidized loans (for which no financial need is necessary) to both undergraduates and graduate students.
The two loans treat interest differently. Direct Subsidized loans do not require you to pay interest as long as you stay in school at least half-time and during any period of deferment. If your subsidized loan was made between July 1, 2012, and July 1, 2014, you will have to pay interest during the grace period (for six months after you leave school), but otherwise not.
Direct Unsubsidized loans gather interest during the life of the loan. If you choose not to pay it, which is possible while you are in school, during the grace period, and during deferment or forbearance, the unpaid interest will be capitalized, or added to the amount of your loan so that it can also begin to draw interest in its own right.
Direct PLUS Loans
Direct PLUS Loans are given to three categories of people: graduate students, professional students, and parents of undergraduates who are still dependents. The USDOE functions as the lender for these loans, and the interest rate is fixed, currently at 7.9%. You may borrow no more than your cost of attendance remaining after your other financial aid has been subtracted.
PLUS loans differ from other Direct loans in their stipulation that you must have good credit history. If you apply for a PLUS loan and do not pass the credit check, there are two possible avenues open. You may find a cosigner (which USDOE calls an endorser) whose credit is acceptable, or you can try presenting proof of extenuating circumstances to explain your negative history.
If you are a dependent undergraduate whose parents are denied a PLUS loan, you yourself may be able to borrow extra money through the Direct Unsubsidized Loan program. There is a 4% origination fee for PLUS loans, as compared to the 1% fee for the subsidized and unsubsidized loans.
PLUS loans for parents must be repaid starting with the full pay-out of the loan proceeds, but students receive automatic deferments during half-time enrollment and for six months thereafter. Parents may also request deferments, but may not always receive them. Interest does continue to collect during deferment periods.
Perkins Loans are a separate category of federal loan for students with great financial need. They carry a lower interest rate (currently 5%), and your school serves as the lender, based on its available funds. Each school has its own revolving loan fund for the Perkins program, meaning new funding comes from payments received.
That means you should apply for Perkins loans as early in the year as possible, to maximize your chances of securing funds. For undergraduates, the annual borrowing limit is $5,500, and for graduate level students the limit is $8,000.
Private Loans For Ohio Students
You should borrow as much as you can in federal loans, because of their lower cost and greater flexibility in terms, but if you find you still have unmet educational expenses after borrowing everything you can from the government, then you will need to resort to the private loan market.
Usually your school’s financial aid office will offer some direction in how to find a suitable lender, so make that your first stop. As an example of available web-based assistance, here is Ohio University’s FastChoice system, which will guide you through a series of steps to help you find a solution.
You can also consult your parents to see whether the banks with which they maintain accounts will offer any relationship discounts in recognition of their business.