All About Undergraduate Student Loans
By Susan Landis-Steward
, last updated June 17, 2011
Undergraduate student loans are fairly simple to get if you apply correctly and list all the expenses you expect to have for college. Student loans are available through banks, colleges and universities, and the federal government. You should look for the best interest rates and other options such as repayment terms, just as you would when applying for any other loan.
The first step to applying for undergraduate student loans is to fill out the FAFSA or Free Application for Federal Student Aid. You can fill this out online. If you are an independent person, meaning you file your own income taxes and nobody claims you as a dependent, you can fill this out yourself. To be considered a dependent you must be under 24, have no dependents of your own, and be single. You cannot be a veteran or a ward of the court. If you are still dependent on your parents for support, they will need to supply information about their income and assets as well.
Fill out the FAFSA in January of the year you plan to begin college. Do not fill it out before January as it is only good for the year in which it is filed. Be sure to include accurate information about your tuition costs, room and board, and include money for textbooks and incidentals. The FAFSA will determine how much student aid you are eligible for.
After you file the FAFSA, you will receive a SARS a few weeks later telling you how much you are eligible for. After that, your school will send you an award letter. This will include figures for student loans, grants, scholarships, and work study. You have to accept the portions of the award that you want to accept.
In most cases, the cheapest option will be student loans through Sallie Mae. You can also check into loans through your bank or credit union.
Direct Stafford loans are low-interest loans that can either be subsidized or unsubsidized. The subsidized loans are for those with demonstrated financial need. You are not charged interest as long as you are in school at least half-time and will have grace periods and deferment periods when payments are not due. Unsubsidized loans are available regardless of financial need. Interest will accrue while you are in school and you can pay while you got to school. You can defer it and have it added to your loan balance which means that you will have to repay larger amounts after you graduate.
Your parents may also apply for Direct PLUS Loans if you are a dependent. Your parents must not have bad credit or must have a cosigner with good credit. You and your parents must be U.S. citizens or eligible non-citizens. They must not be in default on any federal education loans and must meet other requirements. In this case, the parents are responsible for repayment of the loan.
Best of luck to you and your financial plan for school!