1. Do I need Parents’ help, and does it help to reduce the interest rates and increase available amount for the loan?

The federal student loan offers a wide range of repayment plans and options that we can choose from. The Parent Plus Loan, which is a credit card-like loan for parents and is borrowed in the child’s name, provides parents with flexible repayment terms and benefits.

The responsibility of paying for student loan, as well as other education related expenses, lie solely with the borrower. The parent's help does not reduce interest rates or increase available amount for the student loan. There are a few exceptions to this rule which include:

  • parents have taken out a Parent PLUS Loan either before or after their child was born and they have made payments on time to maintain eligibility
  • parents have a co-signer whose credit score is higher than the child's credit score

It is very clear that Parents play a significant role in the decision of student loans.

Parents decide how much they are willing to contribute, and what kind of repayment plan they want their child to get.

One benefit of the student loan is that it doesn’t affect your credit score, which can be helpful if you are trying to apply for other things. A new study shows that people with student loan debt have higher rates of bankruptcy than those without them.

If your parents have excellent credit, see if a private lender offers you a cheaper rate with no origination fee.

2. How Much Money Do I Need to Borrow for a Student Loan and terms?

Student loans are used to help cover the cost of education, whether it is for undergraduate or graduate programs. They are given either by private or public institutions.

When you are taking out a loan, the type of loan that you select will have a significant impact on your monthly payments. The most common types of student loans available today are Federal Direct Stafford Loans, Federal Direct Parent PLUS Loans, and Federal Perkins Loans.

The decision is not as simple as it seems at first glance. You should consider your earning potential, your employment security, and how much you will be able to pay on a monthly basis. In general, you should borrow less than what you can reasonably afford to repay on a monthly basis.

  • Federal Perkins Loan: these loans are subsidized by the government and offer lower interest rates than other types of student loans.
  • Federal PLUS Loan: these loans are given to parents who want to help pay for their child’s college education.
  • Federal Stafford Loan: this loan doesn't require any collateral and offers flexible repayment options to borrowers

Student loan is a type of financial assistance given by the government or other organizations for tuition fee. The main purpose is to provide access to higher education for people who want it but didn't afford it. There are two types of student loan- Federal and Private. Federal student loans are guaranteed by the federal government while private student loans are not originated directly by the government but by lenders like banks or credit unions.

As a young high school or college student, it’s tempting to borrow more than you need when offered a check for thousands of dollars. That’s a mistake.

Rather than grabbing the maximum amount the loan servicer offers, take time to calculate how much you need. That includes tuition and standard room and board as well as the cost of educational and living expenses like books, university fees, supplies, food, and transportation.

Since expenses vary significantly between universities, most colleges have their own cost calculator.

3. Is Loan Forgiveness a Serious option for all Student Loans?

Student loan is a type of financial assistance given by the government or other organizations for tuition fee. The main purpose is to provide access to higher education for people who want it but didn't afford it. There are two types of student loan- Federal and Private. Federal student loans are guaranteed by the federal government while private student loans are not originated directly by the government but by lenders like banks or credit unions.

Student loan forgiveness is the process of taking away the obligation for a student to repay their loans because of difficulty in paying it back. The decision should be made on a case-by-case basis, but it is generally recommended that qualifications include being economically disadvantaged or being disabled.

The government offers student loan forgiveness to loan borrowers who meet specific requirements. The two most popular types of forgiveness are the Public Service Loan Forgiveness (PSLF) Program and the Teacher Loan Forgiveness Program. PSLF is for employees of the government and not-for-profit organizations. The program forgives the remaining balance of all direct loans after you make 120 qualifying monthly payments.

The Teacher Loan Forgiveness Program forgives $17,500 of direct and Federal Family Education Loans (FFEL) after you teach full-time in a low-income elementary school for five consecutive years. If you plan to work in any of these sectors, familiarize yourself with all the specific requirements while planning your financial aid strategy.

4. Can I Reduce the Amount I Need to Borrow?

Students are constantly trying to find ways of saving money while studying. According to Forbes, there are some ways that students can save money without having to give up their lifestyle. For example, use the Zipcar or Uber services instead of buying a car or sharing rides with friends. Also, you can cut your costs by using public transportation and packing your lunch.

If you've decided that you're going to pursue your education, but need to save money along the way, here are some tips and tricks for you!

  • Take advantage of scholarships and grants: It can be a little more work than just applying for loans and other types of aid, but there are scholarships and grants out there that don't require repayment. Apply early so you have more time to find them.
  • Take summer classes: Some students take summer classes during their undergraduate years in order to earn credits so they can graduate sooner or earn credits in higher-priced tuition programs. If your schedule permits, it might be worth it!

You can also minimize your loans by below points:

  • Living at home instead of on-campus
  • Working a part-time job while studying
  • Finding scholarships and grants to fund your studies
  • Attending community college for your first two years of higher education

5. What Interest Rate Am I Eligible for a Student Loan?

Student Loans are some of the most expensive loans. The interest rate for student loans is different depending on the type of federal or private loan you have, your credit score, and the co-signer on the loan.

Many students around the globe are burdened by the high cost of education. There are many financial options available to students for this, one of them being student loans. Students are eligible for either subsidized or unsubsidized loans, depending on their financial need.

Federal loan interest rates are fixed and the same for everyone. But private lenders determine your interest rate based on your (or your co-signer’s) creditworthiness.

While discussing rates, you also need to know:

  • Is It a Fixed or Variable Rate? A variable interest rate means it can change over time. Variable rates often start lower than fixed rates but can fluctuate over time. It’s a gamble. If rates rise, so does the cost of your loan.
  • Does the Rate Change After Graduation? Sometimes, interest rates increase after you graduate. Each private lender has its own terms. If you don’t like them, you can either try to negotiate or find another lender.

When you apply for a loan, the lender makes a hard inquiry on your credit report, temporarily lowering your score. After narrowing down your list of top lenders, complete all your loan applications within a 45-day window. By doing so, all the inquiries are bundled together, so your credit score only takes one hit.

Interest rates for student loans can be anywhere from 2% to 11% APR (Annual Percentage Rate) depending on what kind of loan you have and what type of credit score you have. You can find out what interest rate you are eligible for by filling out a Student Loan Interest Calculator.

6. How do I complete the Student Loan application process?

The process of applying for student loans is not as difficult as it seems. All you have to do is complete the application process by filling out the relevant information, which includes your name, personal details, academic qualifications, financial status and other information required.

The first step is to find a list of eligible institutions that are offering loan schemes. Nowadays most reputable universities are equipped with this facility so you can simply search on their website.

To start off you need to gather all the necessary credentials required to complete the form. This includes copies of your academic qualifications, bank statements and account statements if possible, proof of residence documents like passport or identity card with address proof and utility bills etc.

For federal loans, you must fill out the FAFSA every year between Oct. 1 and June 30. The earlier, the better.

There are no deadlines for private loans, but since they can take several weeks to process, don’t wait until the last second. To be safe, start shopping around for quotes a couple of months in advance, then send your formal applications a month before you need the money.

Nowadays, you can apply for most private loans online. If any questions crop up during the application, clear them up with the lender before submitting your application.

7. What Is the Loan term for Student Loan?

A student loan is a type of loan that is taken out by students in order to finance their education. Often times, the loans are given directly to the student, but investments can also be made into an institution or scholarship fund.

There are two types of student loans: federal and private. Federal loans typically offer lower interest rates and better repayment options than private loans do. Private loans typically offer higher limits than federal ones do, but this is not always the case with each lender.

Federal loans come with a standard 10-year repayment term. Private loan terms vary from lender to lender and range from five to 25 years. That can significantly affect the total cost of your loan. While a shorter term requires higher monthly payments, you pay less over the life of the loan.

Student loans are a type of financial aid given to students by the government or by a college, university, or other institution. Student loan can be granted as a single one-time grant or as several smaller grants.

8. Is there any Fees while applying the Student Loan?

Student loans are one of the most common types of student debt and can be incurred before or after college.

Generally, a process fee is charged at the time of application for a loan. It will be paid by the student's family or guardian if they are unable to do so themselves. The lower he income, the higher the rates will be for this fee.

Before signing any contracts, it’s crucial you understand the fees associated with your loan. The primary fee to be concerned about is the origination fee.

Federal loans carry an origination fee of 1.057% for direct subsidized and unsubsidized loans and 4.228% for direct PLUS loans. The loan servicer calculates this fee based on your total loan amount and deducts it before you receive your balance.

Most private loans don’t have these types of fees, but some do, so it’s wise to ask upfront. When we don’t have the fee, they will make the extra from the interest rate in the long run. So please compare interest rates and origination fee between lenders before you make the decision.

9. What would my monthly payment & when will it start the process?

The total cost of the loan is repaid in regular installments; these installments may vary in size over the course of the repayment period.

Interest typically accumulates on both outstanding principal and previously paid principal, which can result in negative amortization if repayments are not kept up with interest.

Ask your lender to give it to you in simple terms. For example, if you want to take out a 15-year $55,000 loan with a 6% fixed interest rate, ask them how much your monthly bill will be.

Some people find it difficult to pay off their student loans monthly. They may not be able to afford the monthly payments or they may need to pay for other expenses that take up most of their paycheck.

10. How do I receive my student loan disbursements?

There are a number of factors that can affect how fast a student gets their loan disbursements. These factors include the type of school the student attends, the location they live in, and if they qualify for public or private loans.

The specific process varies from college to college, so ask your lender and your school’s financial aid office how (and when) you can access your funds.

In most cases, the loan servicer sends the money directly to your college, which applies it to your tuition, room, and board. The school returns any leftover funds to you to use for other approved expenses.

In the United States, the Federal Direct Loan program is a federally-backed student loan program. It is a need-based program and it helps students pay for college expenses. The Direct Loan, as it is known, helps students who have little or no credit history to borrow money from the government at a low interest rate. One of the main benefits of this type of loan is that it will be forgiven if the student makes 120 eligible payments on time during their career.

11. How Long Is the Grace Period After Graduation?

The grace period, often referred to as the “grace year” is the first twelve months after a student completes their studies. Usually, this time is used to find a job or internship related to their degree, but it also gives them an opportunity to postpone paying off their student loans.

The grace period for federal loans is usually six months but depends on the type of loan. Grace periods for private loans vary by lender and are a critical factor when choosing who to work with.

The grace period is not available for all post-secondary educations. It would depend on the type of school they attended and what was agreed upon with their lender during enrollment. For example, some schools may not offer any help with student loans or grants for students who are graduating from certificate programs that do not have any required courses.

The federal loan forgiveness program offers help: the program will forgive the remaining debt after 10 years of on-time monthly payments and sticking to an income-driven repayment plan. Income-driven repayment plans allow borrowers to make smaller payments based on what they earn, which can be helpful when starting out in their careers or during rough patches such as periods of unemployment or temporary financial hardship.

12. Are there Any Loan Limits for Student Loan?

There are no federal loan limits for student loans. The borrower should borrow enough to cover his/her education expenses.Some private lenders offer loans with no upper limit at all, while others restrict any new loans to $60,000 or $120,000. There are also many federal student loans without an upper limit.

Federal student loans have a yearly cap and a total cap. Your limits depend on the type of loan, your dependency status, and your year in school.

13. What if I miss a Student Loan Payment? Does it impact credit history? Will there be any penalty?

Some students may not think about the consequences of not paying their student loans. They may not know what could happen if they don’t pay back the money they borrowed.

Federal and private lenders handle missed payments differently. If you miss a federal student loan payment, you become delinquent and incur a late fee. After 90 days, the loan service reports your missed payments to the credit bureaus, which can tank your credit score. If you still haven’t paid after 270 days (about nine months), you risk defaulting on your student loan, which carries serious consequences.

Private lenders are known to be even less lenient with borrowers. Missed-payment policies vary by lender but may include steeper late fees and reporting to credit bureaus sooner.

If you miss a student loan payment, it is common for your loan servicer to add a late fee and report you to one or more credit bureaus. A late fee will most likely be charged to your account with each passing day that you do not make a payment and may be up to $50 or more per month based on the amount loaned. The credit bureau will then list the missed student-loan payment on your credit report, and it can affect your ability to take out future loans or get new jobs in some cases.

14. What if I Can’t Afford My Payments? What if I don’t have the job to make the necessary payments?

Student loans can be a huge burden for recent graduates. The student loan provider is the one that will decide if you should pay your loan or not, and it can be difficult to decide what you should do when you cannot afford the payment.

Federal lenders offer several solutions in these situations, including:

  • Income-Driven Repayment Plans. Income-driven repayment plans adjust your monthly payment based on your income, usually by extending the loan term.
  • Forbearance. Certain hardships qualify you to postpone payments for a set period, but interest continues to accrue.
  • Deferment. Certain hardships qualify you to postpone payments and interest accrual.

Ask your private lender if they provide these types of assistance and how to qualify. Private lenders typically have fewer repayment plans and offer shorter forbearance and deferment periods.

It is important to know your payment options before making any decision on your student loan repayment. There are many programs that are available to help people who are struggling with their debts, including deferment or forbearance.

15. Do I Need to Consolidate or Refinance My Loans?

Many people are in debt because of student loans. The main question is to consolidate or refinance the loan.

Consolidation might sound like the best option, but it can backfire if you are not sure what to do with your loans. Refinancing is the way to go if you want to get rid of interest rates and get a new, lower monthly payment.

Lenders use a variety of factors to decide if a borrower qualifies for a private student loan. These include credit score, income, and other aspects. The best way to improve your chances is by getting your credit score as high as possible – especially for underwriters who make decisions based purely on that factor.

Each year you fill out the FAFSA (Free Application for Federal Student Aid), you’re eligible for new federal student loans. Private loans usually only cover a semesters or years’ worth of expenses, so you need to apply for new loans repeatedly.

Consolidation is for federal student loans only. It’s the process of adding your loan balances together, averaging the interest rates, and grouping everything into one, easy-to-manage loan.

Refinancing interest rates fluctuate with the Federal Reserve rate, so for the best deal, wait until the Reserve lowers interest rates. That gives you time to build a solid credit history - another rate-determining factor.

16. What Are Repayment Plan Options?

Loan repayment plans are designed to make repaying your loans more affordable. The table below should help you understand the different types of repayment plans, who is eligible, how it works, and the pros and cons of each plan.

  • Standard Repayment Plan: Fixed payments for 10 years
  • Graduated Repayment Plan: Payments start low and gradually increase over 10 years
  • Extended Repayment Plan: Fixed or graduated payments for up to 25 years.
  • Pay-as-You-Earn Repayment Plan (PAYE): Payments are 10% of your discretionary income capped at what they’d be on the standard plan and forgiven after 20 years
  • Revised Pay-as-You-Earn Repayment Plan (REPAYE): Payments are 10% of your discretionary income, recalculated annually, and forgiven after 20 to 25 years
  • Income-Driven Repayment Plan: Payments are 10% to 15% of your discretionary income, recalculated annually, and forgiven after 20 to 25 years
  • Income-Contingent Repayment Plan: Payments are the lesser of 20% of your income or the fixed payment amount on a 12-year repayment plan
  • Income-Sensitive Repayment Plan: The loan servicer adjusts your payments according to your income so you can pay them in full within 15 years

17. Will I Work My Way Through college?

One way to minimize your debt is to work while you’re in college. But if you aren’t careful, your earnings can affect the federal aid you’re eligible for.

You don’t need to include income from federal work-study programs in your FAFSA (Free Application for Federal Student Aid), and it doesn’t affect your EFC.

Lastly, if you need to enroll in fewer classes due to work obligations, don’t drop below half time. If you do, you’re no longer eligible for federal loans and must start repaying any loans you currently have.

18. Should I seek a Student Loan from Private or Federal Loan?

The Student Loan can be taken from either a federal or private organization. The government provides financial assistance to the students in the form of grants, scholarships, and low-interest student loans while the private organizations provide student loans at high interest rates. These private organizations are typically banks but can also be established by other groups like churches, unions, or alumni associations.

The two types of educational loans differ in many ways. The federal loans are offered directly through the U.S Department of Education while the private ones require approval from an individual lender. There are some other differences too like eligibility criteria for loan applications and repayment options which depend on which type of student loan you choose to avail your needs.

Making the choice between federal and private loans is simple: Use all the federal loans you’re eligible for before thinking about private loans. That’s because federal loans typically come with:

  • Lower interest rates
  • The option to consolidate
  • Various repayment plan options
  • Extra protections like delayed payments and loan forgiveness

19. How can I lower my monthly student loan payments?

The Federal Student Aid offers several repayment plans for loans. They are grouped in five broad categories. The plans with the least amount of monthly payments are Income-Based Repayment Plans.

It's easy to think that the only way to do this is by making more money and trying to make small payments each day. But there are other ways - and these other ways might not be as hard as you think.

Some of the most common discounts are:

  • Automatic Payment Discounts. Shave 0.25% off your federal direct loans by signing up for autopay. Many private lenders match or exceed this discount. For example, PNC knocks 0.50% off their undergraduate student loan interest rate when you set up automatic payments.
  • Loyalty Discounts. Some lenders offer discounts to customers who already have an account with them. For example, Citizens Bank reduces your interest rate by 0.25% if you or your co-signer have an existing account — including student checking accounts.
  • On-Time Payment Discounts. Some lenders also offer discounts after a few years of on-time payments.

If you don’t proactively request these discounts, you may miss out on savings.

20. How Often Will I Have to Apply for New Loans?

Don't worry, you don't need to apply for a new loan every month. You can make one low-interest auto-pay loan and use it as long as possible.

You will want to build a credit history and have a good credit score if you plan on applying for new loans.

You must complete the FAFSA for each year you need a federal student loan.

Private loans usually only cover a semesters or years’ worth of expenses. That means you must shop around and apply for loans multiple times. It also means you have multiple individual loans to pay off after you graduate (though refinancing or consolidation are options).