College Loans for Undergrad Study
Undergraduate Student Finance
Whether you are coming right out of high school, going to college in mid life, or returning to finish an undergraduate degree, chances are very good you will be seeking some financial aid. Do you know that most college students require student loans to make their education a reality?
But the truth is that too many fail to apply for the federal aid for which they qualify, even free grant money goes unused by close to two million low-income students every year.
Here are some questions you likely need answers to:
- What types of student loans are available to undergrads?
- Which ones do you qualify for?
- How and where do you apply for student loans?
- When do you have to repay the money?
Common Sources for Undergraduate Loans
Main sources for undergraduate student loans:
- The Federal government sponsors the Direct Loan Program.
- Federal student loans are also available through the federally sponsored Federal Family Education Loan Program (FFELP) administered through various private lenders such as Sallie Mae and Bank of America.
- You’ll find private student loans marketed by student loan providers and private banking lenders.
- Many states sponsor undergraduate student loans, both FFEL loans and specially packaged private student loans.
Popular Undergraduate Student Loans
The most popular undergraduate student loans are also the most accessible and affordable. Shopping for student loans? Then you must begin here:
Stafford Loans for Undergraduates
By far the most popular and widely disbursed student loan is the Stafford Loan. It comes in two versions: subsidized and unsubsidized. Ask nearly any undergraduate that carries student loans and most will say a Stafford Loan is among them. If you have financial need, as determined by the government, you could qualify for a subsidized Stafford. What makes this different from an unsubsidized Stafford? The federal government pays the loan interest while you’re in school and for the six-month grace period between graduation and loan repayment.
The Direct Loan Program and the FFELP both sponsor subsidized and unsubsidized Stafford Loans.
**Here’s the deal on Stafford Loans: they are available to almost anyone. You can even get a Stafford Loan if you have bad credit or no credit. There is no credit check for these loans and that’s good news for many borrowers.
Apply for subsidized and unsubsidized Stafford Loans when you complete the Free Application for Federal Student Aid (FAFSA).
Parent PLUS Loans: Aid for Parents of Undergrads
Parents of dependent undergraduate students: your best deal on a student loan is the PLUS Loan for Parents. This is a low interest, long-term loan that may give you the financial muscle to pay off the balance of your college student’s education right now. Before you take out a home equity loan or refinance your house allow yourself a few moments to check out why a PLUS Loan for Parents may be a smarter solution.
The Direct Loan Program and the FFELP both sponsor the PLUS Loan for Parents.
**The PLUS Loan is a credit-based loan—your credit history will affect how you borrow on this loan. Bad credit should not exclude you from federal student loans, including this one. A simple solution to your poor credit is to borrow with a credit-worthy co-signor, a willing and trusted friend or family member. In fact, consider this an opportunity to improve your credit situation: in most cases lenders will release the co-signor from the loan agreement once you’ve made a certain number of consecutive, on-time payments. At this point you’re improving your own financial record.
Applications for the Parent PLUS Loans are available through your child’s college financial aid department. You’ll have about 60 days following loan approval before your PLUS Loan repayment begins.
Perkins Loans: Affordable Campus-Based Aid for Undergraduates
Federal Perkins Loans are less commonplace than the Stafford Loans, but are still some of the most affordable. Biggest difference is that Perkins Loans are campus-based aid; if the federal government determines you have extraordinary financial need your college may approve you for a Perkins Loan. How much you receive is completely dependent on available funds at the time of your loan approval. Improve your chances for a Perkins Loan when you apply for federal aid and college admission as early as possible, this is a first come, first served student loan program.
**Like the Stafford Loans this is a no credit check loan, so don’t worry about your credit history. Why? Federal loans are guaranteed against default by the federal government. If you default, the government will pay off your lender—student loan provider, college or university—so they assume minimal risk in extending the loan.
Apply for a Perkins Loan when you file a Free Application for Federal Student Aid (FAFSA). You can fill out the form online or print off a copy and mail it to the Department of Education. Repayment of the Perkins Loan does not begin until 9 months following your graduation.
Federal Consolidation Loans: Manage Loan Repayment Properly
Federal Consolidation Loans are growing in popularity. Given the average student debt it’s understandable why many college graduates could face financial challenges when it comes to student loan repayment. How do you know if you should consolidate your federal student loans? If you are asking yourself the question chances are you already have some precarious finances. Perhaps you’ve even applied for loan deferment or student loan forbearance. This is important: before you default on a loan take our simple self-assessment quiz. Find out right now if you are a candidate for loan consolidation.
The Direct Loan Program and FFELP both offer the Federal Consolidation Loan.
**The good news: because this is a federally guaranteed loan there is no credit check required.
Private College Loans for Undergraduates
Because not all federal loans are substantial enough to cover your college expenses, private student loan providers have designed a special population of student loans. Private student loans come by all names, branded by specific nationally known lenders.
There is a right way and a wrong way to use private student loans:
Your best student loan strategy should be to squeeze every dime you can from your federal loans, like the Stafford Loans. If you qualify for subsidized Stafford Loans you may also be approved for unsubsidized Staffords as well. Once you’ve received federal funding, then you may consider private loans. Calculate how much you still need to finance. Online college cost calculators are simple to use. Armed with the balance you owe for college, evaluate lenders.
Private student loans are available from student loan providers like Sallie Mae and from traditional banking institutions like Chase and Citibank. Apply online using lender-specific applications.
**Your credit history must be quite good to qualify on your own for a private loan. Here’s how you can leverage your bad credit to get approved for a loan: borrow with a credit-worthy co-borrower. This is a common strategy and will only help you improve your credit record.
Remember, use federal dollars first for financing your college education and augment with private loans for the best all around student loan strategy.
