Are you looking to apply for an educational loan? Does the process have become complicated in the pandemic? You will get the answers in this article. Thousands of students apply for an educational loan every day to access the standard of education they are willing to have. But you must know How to apply for a student loan in the beginning to get through the situation. You need to understand all the steps, including eligibility criteria, process, required documents, and much more. Start collecting information about eligibility and other requirements as early as possible.
Federal Government in the USA has established a good procedure for providing educational loans to eligible and needy students. The Department of Education has taken this initiative and provide loans to the students as a lender. With correct documents and eligibility criteria, you can get the amounts easily for completing your course.
Impact of COVID 19 on education loan
You can apply for a student loan from the Federal Government anytime with proper eligibility. But with the sudden stall on all federal procedures, banks, and other financial institutions have slowed down the approval of the loans. Moreover, due to the restriction on the educational institutions and government work process in this pandemic, application processing is also delayed. The Impact of COVID 19 on education loan is quite effective and long-lasting in this field.
As the ratio of lay-offs from job designation is increasing due to the impact on the economy, the demand for federal student loans is increasing more than ever. Some students are losing their year just because of a lack of funds. The situation is very grave, and students need help to stand on their own with proper education.
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Steps to apply for student loan
Answer to your question of How to apply for student loan also informs that you need to follow the steps for completing the process of free application for federal accordingly-
- Complete and submit the form of Free Application for Federal Student Aid (FAFSA) form.
- You will get the financial aid offer from the college or career school, based on the results of your form.
- Your financial aid offer may help you to get student loans.
- You have the opportunity to select the loan partially or completely, and your school will guide you on this.
- But before the loan funds reach you, you have to
- Fulfil your entrance counselling which is a way to make you oblige to the process of student loan repayment.
- You need to agree on the terms and conditions of the loan signing the ‘Master Promissory Note.’
You need to contact the institution where you will take admission and take the loan for further authorization. The Financial aid office of that institution will help you in processing the application for federal student.
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What are the four types of student loans?
The US department of education offers the federal student loan to the eligible student as a lender. There is a specific program within which these loans are offered to the students of the USA. You can apply for four kinds of student loans, such as –
Direct subsidized loan
Students who have completed their school and are eligible for undergraduate courses in different colleges and career schools can apply for subsidized loans to cover their higher education costs.
Direct Unsubsidized Loan
These unsubsidized loans are meant for professionals, graduate, and undergraduate students across the nation. But the eligibility criteria are not based on the financial requirement of the students.
Direct PLUS loans
Graduates, undergraduates, dependent on their parents, and professional students can apply for a student loan for their course expenses, which they cannot get from any other financial aid. Though the financial need is not the main requirement, a good credit score can be helpful. Otherwise, you may have to qualify with other requirements.
Direct consolidation loans
You can combine all your eligible federal student loan amount into a single loan to receive from a single loan service provider and need to apply with all qualifying documents.
You can also apply for private student loans from different private lending agencies or private banking services. But you may have to pay higher interest rates than the federal student loans to continue with your course.
Eligible criteria for applying student loan
As per the guidelines of Federal student loan, any student applying for the loan must
- Analyse the financial requirement for a different program.
- Be an eligible US citizen or non-citizen with other criteria.
- Own a social security number except for students from places like the Republic of Marshal Island, Micronesia, and Palau.
- Have to be registered with selective service. For a male, the age limit is 18-25 for registration.
- Have enrolled or your application has been accepted in any of the degree courses or certificate courses
- Have continued satisfactory academic performance in college or career school.
- At least half-time enrolled for the direct loans offered by the Federal government.
- Sign the statement in the FAFSA form stating that no other educational loan is unpaid, and you will use the money for solely education gain.
- Prove your eligibility for enrolling in a college or career school, providing certificates or previous schools and courses in detail.
What are the documents required for a student loan?
You need to furnish a list of documents for eligibility to get the loan to pay for college-
- Your credit score and history of your loan experience are necessary. In most cases, the private lender collects the documents regarding this.
- You need to prove that you are a US citizen or a valid non-citizen to apply for the loan with the required papers.
- You must provide your social security number and related documents.
- All your assets and bank details related documents.
- You must furnish your employment papers along with your salary sheets.
- You have to share all the tax-related documents to ensure your eligibility properly for the secured repayment plans.
How much money can you borrow in student loans?
You must learn about the amount while learning How to apply for student loan. The amount you can borrow depends on your condition, like whether you are a graduate, a professional, an undergraduate student, or a parent of the student applying on behalf of the student for the college costs. But for private student loan, it varies with different lender.
- As an undergraduate student, depending on their dependency status and which school or course you have chosen, you can borrow under the schemes of direct subsidized and non-stabilized loans up to $5,500/- to $12,500/- every year.
- As a graduate and professional student, you can borrow $20,500/- every year under direct unsubsidized loan plans. You can also come under a direct PLUS plan for your college fees finalized by your school, which does not come under other financial aids.
- As a parent of your dependent graduate student, you can borrow money under direct PLUS loans to pay the remaining of your kid’s college fees as set by the school, which cannot be collected from any financial aid.
When you know how to apply for student loan quite well, you must start the process to get the loan in time. You must remember that you have to provide monthly payments to pay back the amount you received as a loan. If you are eligible and require a larger amount, you can apply for a private loan.
In that case, the process may be less time-taking, but the loan payments are much complicated. You have to pay a higher interest rate, and your parent can only pay half of the amount; the rest is upon you. Companies like Sallie Mae have established themselves as a helpful organ to make the loans more widely available to the students.
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