1. Is credit check necessary for student loans?
Federal student loans, in general, are not credit-based, they are more of need-based. However, parent borrowers of Direct PLUS loans (parent loans) must undergo a credit check.
Private student loans, which are made by banks and other private lenders, do credit checks as part of the qualification process.
2. How do I qualify for a federal student loan?
Qualifying for federal student loans generally requires a half-time enrollment in a school that participates in the relevant program. This enrollment in a program must lead to a degree or a certificate to be awarded by the school.
To qualify for subsidized Stafford loans, you have to prove financial need. A show of financial need is not necessary for an unsubsidized Stafford loan. A Perkins loan requires a student to demonstrate exceptional financial need.
3. How do I become eligible for a private student loan?
4. Is there a borrowing limit on student loans?
With federal student loans, it is usually the school that will determine how much you can borrow, provided that it should not exceed your financial need (for subsidized loans).
|Borrower||Direct Subsidized and/or Unsubsidized Loans||Perkins Loans|
|Undergraduate Student||$5,500 to $12,500 a year||Up to $5,000 every year|
|Graduate Student||Up to $20,500 a year (Direct Unsubsidized Loans)||Up to $8,000 every year|
|Parent||Other college-related costs not provided for by financial aid.|
Private student loans, on the other hand, are flexible when it comes to lending amounts. They offer higher borrowing limits than federal student loans so the proceeds can go to the tuition and living expenses. You can also take out a smaller amount using private student loans.
5. How long must I repay my student loan?
Under a standard repayment plan, Direct Loans and Federal Family Education Loans (FFEL) can be repaid between 10 and 30 years, with a loan of less than $7,500 to be repaid in 10 years and a loan of at least $60,000 to be paid back in 30 years. Perkins Loans have a repayment plan that differs from those of Direct Loans. You have the option to consolidate your federal student loans into a single Direct Consolidation Loan to simplify repayment.
Private student loans have varying repayment plans. These loans can be consolidated into one private education loan that entails a single monthly payment.
6. How do I get the best rate for my student loan?
Federal student loans offer lower fixed interest rates while private student loans offer competitive rates based on credit score and other factors. When deciding which loan to secure, consider the annual percentage rate (APR) as it is true cost of the loan. You can ask any of our lenders to provide you with APR examples to give you an idea how much a student loan would cost.