What Does a Student Loan Cover?
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If you’re considering taking out a student loan, you’re probably wondering what exactly it will cover. In this blog post, we’ll break down everything you need to know about student loan coverage.
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Types of Student Loans
There are four types of student loans: federal Stafford loans, federal Perkins loans, federal PLUS loans, and private student loans. Each type of loan has its own benefits and drawbacks, so it’s important to understand the difference before taking out a loan. Federal Stafford Loans are the most common type of loan, and they have a fixed interest rate. Federal Perkins Loans are for students with exceptional financial need, and they have a lower interest rate. Federal PLUS Loans are for parents and graduate students, and they have a higher interest rate. Private student loans are offered by banks and other financial institutions, and they have a wide range of interest rates.
Federal Loans
Federal student loans are funded by the government and may be either need-based or not need-based. Need-based loans are awarded based on your financial need, as determined by the FAFSA, and you must demonstrate financial need to qualify. Not need-based federal student loans, on the other hand, do not require you to demonstrate financial need. All federal student loans come with benefits and protections that are not typically offered with private student loans, such as fixed interest rates, income-driven repayment plans, and loan forgiveness programs. The main types of federal student loans are Direct Subsidized Loans and Direct Unsubsidized Loans.
Private Loans
Private student loans are credit-based, meaning your credit score and income are major factors in loan approval and interest rates. Private loans also tend to have less flexible repayment options than federal loans. If you have good credit, you may be able to find a private loan with a lower interest rate than the unsubsidized federal loan.
What Student Loans Cover
A student loan is a type of loan that is specifically designed to help students pay for their education. Student loans can cover the cost of tuition, books, and other education-related expenses. In most cases, student loans are available to both undergraduate and graduate students.
Tuition and Fees
Your student loan money will be sent directly to your school and applied to your tuition and fees first. If there is any money left over after your tuition and fees are paid, the school will give you the remaining funds in the form of a refund, which you can use for other education-related expenses.
Room and Board
For students who will be attending school away from home, room and board costs can be a large part of the overall expense. Room and board costs vary widely depending on the school you attend and the type of housing you choose.
On-campus housing is often less expensive than off-campus housing, but it is not always available. Many schools guarantee on-campus housing only to first-year students or students with special circumstances.
Off-campus housing options run the gamut from renting an apartment or house to living in a dormitory-style setting. Students who choose to live off campus should factor in the cost of utilities, furniture, and transportation when budgeting for their education.
Books and Supplies
One of the main expenses that student loans cover is the cost of textbooks and other required course materials. These can be purchased through the campus bookstore or online retailers. Some students opt to rent textbooks instead of buying them, which can save money. Other students buy used textbooks or find digital versions that are often less expensive than print versions. In addition, some colleges and universities offer programs that allow students to borrow textbooks for the semester and return them at the end of the term.
Other Educational Expenses
In addition to tuition and fees, student loans can also be used to cover other educational expenses such as room and board, books and supplies, and transportation. Some loans even cover the cost of a computer.To be eligible for most student loans, you must be enrolled in at least half-time status at an eligible school.
If you’re not sure what your school considers to be half-time status, check with the financial aid office. In general, half-time status is considered to be six credits for undergraduate students and four credits for graduate students.
Keep in mind that you’ll likely have to begin making payments on your student loans within six months after you graduate, leave school, or drop below half-time status. If you’re having trouble making payments on your student loans, there are options available to help you.
How to Apply for a Student Loan
The first step in applying for a student loan is understanding what the loan will cover. The Department of Education’s Federal Student Aid office provides Loans to Help You Pay for College or Career School. You can use this loan to pay for your education expenses, including tuition and fees, room and board, books and supplies, and transportation. You’ll need to repay your student loan, with interest, after you finish your education or leave school.
Federal Loans
Does your child need help paying for college? If you’re not sure how to get started, this guide will show you the steps to take to apply for a student loan.
The first step is to fill out the Free Application for Federal Student Aid (FAFSA®) form. This form is used to determine your eligibility for federal student aid, which can include grants, loans and work-study opportunities. You’ll need your most recent tax return and some other financial information to fill out the form.
If you’re eligible for a federal student loan, you’ll be notified in your award letter from the school. The next step is to accept the loan and complete the Master Promissory Note (MPN), which is a legally binding document that explains the terms and conditions of the loan.
Once you’ve signed the MPN, your lender will send you a disclosure statement that provides more information about the loan, including the interest rate and fees. Make sure you understand all of this information before you agree to take out the loan.
You should also start thinking about how you’re going to repay your student loans after graduation. Federal student loans offer several repayment plans, including income-based repayment plans that can lower your monthly payment if you’re having trouble making payments. You can also consolidate your federal student loans into one loan with one monthly payment.
If you have any questions about student loans or financial aid, contact the financial aid office at your child’s school or give us a call at 1-800-4-FED-AID (1-800-433-3243). We’re here to help!
Private Loans
Private loans are non-federal loans, made by a lender such as a bank, credit union, state agency, or a school. They have fixed or variable interest rates and can be either need-based or non-need-based.
The U.S. Department of Education’s office of Federal Student Aid (FSA) recommends that you exhaust your federal loan options before taking out a private loan. That’s because federal loans usually have lower interest rates and more flexible repayment terms than private loans.
If you decide to take out a private loan, you’ll need to complete a Free Application for Federal Student Aid (FAFSA®) form to see if you’re eligible. You’ll also need to meet the credit and other eligibility requirements of the chosen lender.
