How Do Student Loans Work
By Andrea Travillian. Kids & Money Expert
When you’re getting ready to head off to college, one of the most confusing things can be how student loans actually work, the process seems so complicated.
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The first thing that you’re going to do is fill out your financial aid forms. You will do this online at the Federal Student Aid website .
After you have submitted your FAFSA, you will receive your Student Aid Report. Depending on the information you gave them at registration, you will either get this online or mailed do you. Verify that all the information is correct and that the school you are attending is actually listed on this report.
Next you will want to check with your school what other documentation they require.
You can expect them to request things like pay stubs and tax returns.
After your school receives all this information, then they determine what type of aid you will receive.
They take scholarships, grants and anything else that you may qualify for and come up with the student a loan amount that you are allowed to take out.
Once you’ve been given this
amount, you then you will go through the process of accepting the loan and filling out the paperwork.
Then the loan is typically distributed directly to your school for payment of tuition.
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If there is an overage with tuition, they will typically send you a check. Don't assume that if you get this check that tuition has been covered, double check that tuition has been paid before you spend it all!
The loan is actually distributed in different payments. For example if your total loan amount is $20,000 for the year, it will actually be paid out in the amount needed for each semester.
You will need to repeat this process every year that you want to qualify for financial aid.
Finally, when you’re no longer in school or you don’t qualify to not have to pay on the loans, you will begin paying back the loans.
There you go. Short, simple and sweet, the process of how a student loan actually works. If at any point in the process you are confused and need assistance, call your schools financial aid department. They are there to help you understand this entire process.Source: kidmoney.about.com