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How To Get Student Loans

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How to Get Student Loans

, whether it ends up affecting your student loan options or not.

Worried about how to get a student loan with bad credit? Or do you just want to start building good credit? Here are a few things you might want to consider, according to the CFPB:

  • Pay off debt. How much current unpaid debt you have can affect your credit scores. That includes debt from credit cards, personal loans, car loans and more.
  • Make on-time payments. A history of late or missed payments could lower your credit scores. Setting up reminders on your phone or computer can help you remember to make payments on time. You can also set up autopay for any bills that offer this option.
  • Keep credit utilization low. Your is a comparison between how much credit youâre using and how much you have available. The CFPB recommends keeping this number below 30%.
  • Become an authorized user. An is a person a cardholder has granted access to use their credit card account. If card activity is reported to the credit bureaus, responsible use of credit as an authorized user can help build or improve your credit. Being an authorized user can also help you establish credit if you donât have a credit history yet. But keep in mind that if the account is not used responsibly by the cardholder or the authorized user, it could reflect negatively on both of you.

Are Emergency Student Loans A Good Idea

While emergency student loans or hardship loans can be helpful, theyre not for everyone.

Consider the following factors before applying:

  • Are you eligible? Not all schools offer emergency aid, and if they do, there could be eligibility requirements. In addition, the loan amount may not offer enough money to help you out.
  • Will you be able to repay the loan? An emergency loan is still a loan, so consider whether you can handle more debt. Having a loan go into default may jeopardize your education and your eligibility for future financial aid. In other words, try to establish a plan before you borrow money.
  • Can you afford the costs involved? Some emergency student loans dont charge interest, unlike personal and student loans. However, you could pay a service or loan origination fee, so check before proceeding to see whether its something you can afford.

Check Out Emergency Student Loan Programs

Many colleges have their own program for emergency loans. Here are the key factors to consider, along with sample options offered at various schools:

  • Borrowing limit: Quick student loans may limit how much you can borrow. For instance, Georgia Tech offers institutional emergency loans of up to $1,500.
  • Repayment period: These loans provide quick cash to students in need, which typically requires fast repayment. California Polytechnic State Universitys emergency student loans, for example, require full repayment within 90 days.
  • Interest rate: Some emergency student loans are interest-free, while others are not. For example, Duke University charges 3.5% interest for emergency student loans. In contrast, the University of North Carolina in Chapel Hill provides an interest-free, short-term loan for students in need of temporary funds.
  • Service charge: You may need to pay a small processing or service charge. For instance, the University of Nevada charges a $20 service fee for each emergency loan.

Youll often need to complete an application for institutional emergency aid. The financial aid office will then assess your eligibility.

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Stay In Touch With Your Loan Servicer

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As soon as you think that youll have trouble making your monthly payment, contact your loan servicer to discuss your situationthey are there to help you. Additionally, if you enrolled in an income-driven repayment plan, your loan servicer will let you know when its time to recertify your income and family size.

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Start By Submitting The Fafsa

Submit a Free Application for Federal Student Aid, or FAFSA, to find out how much financial aid you may qualify for, such as grants, scholarships and work-study, that wont have to be repaid. It takes about 30 minutes to complete. Each school you apply to will use the FAFSA to determine your financial aid the gap between aid and cost of attendance is what you have to cover.

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Much Uncertainty About Student Loan Relief

Could another such extension take place? Maybe but it’s not in the cards yet.

The Biden administration announced an ambitious but controversial federal student loan forgiveness program in late August. A simple online application was officially launched Oct. 17 by the U.S. Department of Education at its website StudentAid.gov.

About 22 million borrowers applied for relief during that first week.

But the massive student loan forgiveness program was quickly put on hold after a temporary stay was issued by a federal appeals court on Oct. 21.

The action by the Eighth U.S. Circuit Court of Appeals in St. Louis temporarily blocks the Department of Education from processing debt relief while the court considers challenges brought by attorneys from six Republican-led states.

Opponents say President Joe Biden does not have the authority to forgive federal student loans because Congress did not authorize the massive debt relief program. Conservatives say the Biden administration has no grounds to invoke the HEROES Act of 2003 to offer widespread forgiveness to these borrowers during a national emergency, such as the pandemic.

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Student loan borrowers should still plan on the repayments resuming in January, if the appeals court stay is lifted soon, according to Mark Kantrowitz, a student loan expert who is the author of “How to Appeal for More College Financial Aid.”

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Check Out Tuition Installment Plans

The vast majority of U.S. colleges and universities offer tuition installment plans that can help you take a bite-sized approach to paying down tuition costs and curb the need for any student loan. If youve saved up enough money, paying your tuition via monthly installments buys you some time to so you dont need to make that huge upfront, lump-sum payment.

Even if you steer $2,500 of your savings toward $10,000 worth of college tuition costs for a semester, thats $2,500 less than youll need to borrow in a student loan scenario. So ask your bursars office about signing up for a tuition payment plan.

Tuition installment plans are also a good option if the student is trying to work their way through college.

Who Is Eligible For A Refund

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Borrowers who hold eligible federal student loans and have made voluntary payments since March 13, 2020, can get a refund, according to the Department of Education.

For some people, that refund will be automatic. You can get a refund without applying if your payments brought your loan balance below the maximum debt relief amount: $10,000 for all borrowers, and $20,000 for Pell Grant recipients. Borrowers can check their balance in their studentaid.gov account.

For example, if a borrower paid $100 a month for 10 months of the pandemic and their balance is now $8,000, that $1,000 will automatically be refunded. Then they can apply to get the rest of their debt forgiven.

But if a borrower paid throughout the pandemic and still owes $14,000, they won’t get an automatic refund. They can, however, apply to have $10,000 of that debt erased.

Another group of people that has to apply for a refund is those who completely paid off their loan balance during the pandemic. If that’s you, you’re eligible for loan forgiveness, but you’ll have to request a refund prior to applying for debt relief. Borrowers should confirm their eligibility for the loan forgiveness program prior to requesting a refund.

For example, if a borrower had $5,000 in debt at the start of the pandemic and paid it all back during the freeze, but is eligible for up to $10,000 in forgiveness, they would apply for a $5,000 refund, then apply to have their debt forgiven.

Eligible federal student loans:

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Four Action Steps To Get A Student Loan Without A Parent

Although it can be difficult to get a student loan without your parents information or credit history to support your application, it is possible, at least for some people. You can get student loans without parents if youre classified as an independent student, or, in some cases, a dependent student.

If youre wondering how to get a loan for college without your parents help, leverage the right strategies to get a parent-free loan:

How Does Cosigning A Student Loan Work

Cosigning a student loan is a significant financial commitment. That’s because when you cosign a loan, you agree to repay the debt if the primary borrower fails to.

In exchange, the lender will also consider your credit history, income and other factors to make its decision. In addition to increasing approval odds, cosigning can also help your child secure a lower interest rate on the debt.

Because you’re obligated to repay the loan if your child doesn’t, however, the loan will show up on your credit reports, even if you never actually make a payment.

In some cases, private lenders will offer cosigner release programs, where the primary borrower can have the cosigner removed after they make a minimum number of consecutive payments and meet the lender’s creditworthiness requirements on their own.

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How Do I Apply For More Financial Aid

Your financial aid is determined by your Expected Family Contribution, which is a calculation of what your family can reasonably contribute toward your college education. However, if youve experienced financial hardship or extenuating circumstances, you can contact your schools financial aid office to inquire about appealing your financial aid award letter.

In the end, its up to your school whether your case merits a review.

Alternatively, you can apply for an emergency student loan, which often comes with low or no interest and can help in a bind.

And, of course, private student loans can be used to cover the remaining gaps. Just remember that private lenders tend to impose higher interest rates and dont usually offer the flexible repayment plans youll get with federal student loans.

Maintain Good Credit To Avoid Some Of The Drawbacks Of Cosigning

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While cosigning your child’s student loan can negatively affect your credit score, you can limit that potential impact by being vigilant about maintaining good credit. With Experian’s free credit monitoring service, you can keep track of your FICO® Scoreâ and Experian credit report.

Having this information at your fingertips can help you spot potential weaknesses in your credit file and address them. It can also help you stay on top of problems as they arise, so you can take swift action to avoid further damage.

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What Are Some Advantages Of Federal Loans Over Private

Federal loans have relatively low, fixed interest rates and offer a variety of flexible repayment plans. Private loans, unlike those from the government, aren’t based on financial need. Borrowers may have to pass a credit check to prove their creditworthiness. Borrowers with little or no credit history, or a poor score, may need a cosigner on the loan. Private loans may also have higher borrowing limits than federal loans.

How Do You Qualify For Federal Student Loans

In order to receive federal financial aid, you must be a U.S. citizen or eligible noncitizen who attends or plans to attend an eligible college or university at least half-time, as noted above. Furthermore, you must maintain satisfactory academic progress in order to receive financial aid. Although the Department of Education reviews your and your familys financial documents when calculating your loan and grant amounts, theres no defined income limit to apply.

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How Can I Apply For A Refund

Borrowers who want a specific amount refunded can apply by calling their loan service provider. Right now, refunds are only being done via phone and not through any website or email.

When the Biden Administration announced the forgiveness, loan servicers found themselves inundated with calls. But many borrowers now say they’re not waiting long when calling.

“I was on hold for about five minutes,” said Megan McParland, of New Jersey, who graduated in 2018 and made several payments during the payment freeze.

McParland requested a refund the first week of September. At first, she felt the servicer tried to dissuade her from making the request. But after confirming that she wanted to proceed, she was told that she would see her refund in about a month.

Sierra Tibbs, a 47-year-old resident of Casselberry, Florida, had a similar experience. The entire phone call with her loan servicer took around 20 minutes.

Tibbs applied for a refund after seeing a video online informing her that she could get back money she paid during the pandemic.

If you are unsure who services your loan, or if the servicer changed during the pandemic, visit your student aid account dashboard and scroll to “my loan servicers” or call 1-800-433-3243.

Before calling your loan provider to request your refund, you need to know your account number and the amount you want refunded.

Loan servicers’ phone numbers:

Relatively Low Interest Rates

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Additionally, federal student loans are low-interest student loans and often have lower rates than even the best private student loans, making the cost of borrowing for your education less expensive.

Federal student loan interest rates are set by Congress each year, but once you receive a loan, the interest rate does not change.

Some private student loan lenders offer variable interest rates that may seem lower initially, but as interest rates rise, so will your student loan interest rates.

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Fill Out And Submit The Fafsa

If you need to pay for college, your first step should be completing the Free Application for Federal Student Aid . Your school will use your FAFSA results to determine what federal student loans and other federal financial aid you qualify for.

Tip:

Also keep in mind that some aid is given on a first-come, first-served basis so its a good idea to complete the FAFSA as early as possible, especially if you have high financial need.

Alternatives To Federal Student Loans

Federal loans offered by the Department of Education are a popular option for funding your college education. However, the funds may not be enough depending on your schools cost of attendance and other personal expenses.

Here are some alternatives to consider, starting with some non-loan options that should be sought before taking out any federal or private loans.

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How To Apply For Federal Student Loans

Fortunately, the Department of Education makes applying for federal financial aid pretty straightforward. Heres how the whole process works:

  • Check if your school participates in the federal student aid program. Most colleges and universities do, but certain private or specialty schools might not. Use the federal school code list to ensure your desired institution accepts federal aid.
  • Gather necessary paperwork. Federal aid amounts including federal student loans are allocated based primarily on your or your familys income and assets. Make sure to have important documents on hand before applying, such as recent tax returns, pay stubs, savings account info and other sources of income.
  • Submit the FAFSA. This is your main document for every type of federal aid, including loans, work-study programs and grants. Each years FAFSA opens on Oct. 1, and you have to reapply every year. Check your school and state-specific FAFSA deadlines to ensure you file on time.
  • Review your financial aid report. After submitting your FAFSA, youll receive a student aid report outlining all your info. Double-check this for any errors, as it will be sent to your prospective schools.
  • Review your award letter. You can then wait to receive a college acceptance letter along with an award letteroutlining your financial aid package. Youll receive multiple award letters if several schools accept you, so youll want to compare them.
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