How to Get a Student Loan
By Justin Pritchard. Banking/Loans Expert
Justin Pritchard helps consumers navigate the world of banking.
Paying for education is never easy. Some families and employers cover the costs, but not everybody is so fortunate. If you need to come up with more money, you’ll need to know how to get a student loan. This page covers the options available to you, and what you need to know before you borrow.
Try to Not Borrow
It’s easy to get money now, but it won’t be easy to pay it off later. Yes, an education is an investment, and it’s often well worth it to borrow money to fund your education. However, you can thank yourself later if you minimize your debt burden by:
- Working part-time (even if it means taking an extra semester or two)
- Considering employers that pay for education
- Going to school at less expensive institutions
- Hunting for grants and scholarships
Know Your Options
When borrowing for education, you have several options.
Make sure to consider all of them and choose the one that fits you the best. Be sure to consider:
- Loans offered under government programs
- Private student loans
- Loans from family members
- Home equity loans
- Peer to peer loans
- Unsecured “signature” loans
- Credit cards
Start With Government Loans
Student loans from government sources are probably your best bet. These loans will generally have lower interest rates. and some of the interest may be paid (subsidized ) on your behalf while you’re in school.
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There are several other benefits to government backed
loans, which you can read about here: Advantages of Federal Student Loans .
The drawback of government programs is that they may not cover all of your expenses. There are limits on how much you can borrow, and if you need more you’ll have to find it elsewhere.
How to Get Federal Student Loans
To get a student loan as part of a government program. visit your school’s financial aid office. Let them know that you’d like to borrow, and they’ll tell you what steps to take. You’ll have to fill out a FAFSA form. which will determine what type of aid you’re eligible for.
Start With the End in Mind
As you apply for loans, remember that you’ll have to repay them some day. Run some numbers to understand what you’re getting yourself into -- even before you pull the trigger on getting a loan. Plug your loan details into a loan amortization calculator. and see how much you’ll have to pay each month, and how much you’ll pay in interest over the life of your loan. This is an important part of your education.
If You Don’t Qualify
You should be able to qualify for certain government loan programs regardless of your income or credit score. However, if you need more money, you’ll have to qualify for loans with private lenders. That means you’ll need debt to income ratios and credit scores that are high enough to borrow more -- and students frequently don’t meet those criteria.
If you can’t get a loan on your own, you may need the help of a co-signer. Another person can apply for the loan with you, promising to repay the loan if you fail to do so. Co-signing is risky, so only ask somebody who can afford to take the risk and who understands what they’re getting into.Source: banking.about.com