Frequently Asked Questions

Answered by Mark Kantrowitz

The main difference between subsidized loans and unsubsidized loans is that the federal government pays the interest on subsidized loans during periods of authorized deferment, such as the in-school and economic hardship deferments, while the interest remains the responsibility of the borrower on an unsubsidized loan. This makes subsidized loans a less-expensive option for students.

How do I find student loans if I have bad credit?

Answered by Mark Kantrowitz

Most traditional students, enrolling in college immediately after graduating from high school, have a thin or non-existent credit history. If they have a credit history, it is usually a bad one. So, how can an undergraduate student qualify for a student loan with bad credit?

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How do I find student loans if I don't have a creditworthy cosigner?

Answered by Mark Kantrowitz

Most new private student loans require the borrower to have a creditworthy cosigner. This includes more than 90% of new private student loans to undergraduate students and more than 75% of new private student loans to graduate and professional students. But, what if the student doesn’t have a creditworthy cosigner?

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What should we do if our Parent PLUS Loan is denied?

Answered by Mark Kantrowitz

The Federal Parent PLUS loan is available to borrowers who do not have an adverse credit history. There are several options available to a student whose parent is denied a Federal Parent PLUS loan because of an adverse credit history.

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Do I have to repay a Federal Stafford Loan?

Answered by Mark Kantrowitz

By signing the Master Promissory Note (MPN) for a Federal Stafford Loan, the borrower promises to repay the loan. The Master Promissory Note is a legally binding agreement. It specifies the terms of the loan.

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Can I transfer my student aid to a different college?

Answered by Mark Kantrowitz

Financial aid does not transfer with the student directly. A transfer student will need to reapply for financial aid at the school to which he or she is transferring. The student will also need to add the new college on his or her FAFSA.

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How much can an undergraduate borrow with a Federal Stafford loan?

Answered by Mark Kantrowitz

These Federal Stafford loan limits are for the 2015-2016 academic school year. The loan limits are based on the student’s grade level and dependency status. Independent students can borrow more because they are paying for college without assistance from their family. Dependent students whose parents were denied a Federal Parent PLUS loan are eligible to borrow at the independent student limits. It is important to note that even if a student is financially self-sufficient and paying for his/her education on his/her own, dependency status is still determined by the school.


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What are the penalties for early student loan payment?

Answered by Mark Kantrowitz

There are no prepayment penalties on federal student loans. Borrowers may make extra payments on their student loans or pay them off in-full without having to pay a fee or other penalty. To make a payment, contact the loan’s servicer. Borrowers can find their servicer using the student access portal to the National Student Loan Data System (NSLDS).

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What are the benefits of Federal Stafford Loans?

Answered by Mark Kantrowitz

After exhausting sources of gift aid like grants and scholarships, students should always borrow federal first before turning to parent education loans and private student loans. Federal student loans, such as the Federal Stafford loan, are cheaper, more available and have better repayment terms.

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What can I use a Federal Stafford Loan for?

Answered by Mark Kantrowitz

Federal Stafford Loans can be used to pay for education-related expenses, for those items included in the college’s published cost of attendance, often referred to as the student budget. The Free Application for Federal Student Aid (FAFSA) includes a Statement of Educational Purpose, in which the student certifies that he or she, “will use federal and/or state student financial aid only to pay the cost of attending an institution of higher education.

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How do I apply for a Federal Stafford Loan?

Answered by Mark Kantrowitz

Borrowers must file the Free Application for Federal Student Aid (FAFSA) before they can obtain Federal Stafford loans. How to apply, step-by-step: 1. Complete the FAFSA or Renewal FAFSA (for returning students). These forms may be filed at www.fafsa.ed.gov. 2. Receive a financial aid award letter by mail or email. This letter will summarize the financial aid available to the student, including the Federal Stafford Loan.

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How do graduate students qualify for federal financial aid?

Answered by Mark Kantrowitz

To qualify for federal sources of financial aid, graduate and professional school students must complete and submit the Free Application for Federal Student Aid (FAFSA). The FAFSA is a prerequisite for the unsubsidized Federal Stafford Loan and the Federal Grad PLUS loan. Submit the FAFSA form as early as possible after January 1.

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Are there subsidized loans for graduate students?

Answered by Mark Kantrowitz

The subsidized Federal Stafford Loan is no longer available to graduate and professional school students. As of July 1, 2012, graduate students and professional school students are eligible only for the unsubsidized Federal Stafford loan. Undergraduate students remain eligible for new subsidized Federal Stafford loans.

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What are the benefits of Federal Consolidation Loans?

Answered by Mark Kantrowitz

Federal consolidation loans allow borrowers to combine several federal student loans into one loan to streamline loan repayment. The monthly payment amount may decrease because repayment can be spread over a longer time period. Because there are no penalties for prepaying the loan in full or in part, borrowers may make larger monthly payments or extra payments if they wish. Borrowers may also change repayment plans at least once a year.

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What are government student loans?

Answered by Mark Kantrowitz

About two-thirds of undergraduate and graduate students borrow to help pay for their college education. The majority of these students borrow from government student loan programs. These loans generally have low interest rates and do not require credit checks. Government student loans loans also provide a variety of flexible deferment and repayment options.

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What are the credit requirements for Grad PLUS loans?

Answered by Mark Kantrowitz

The borrower of a Federal Grad PLUS Loan must not have an adverse credit history. An adverse credit history is defined as being 90 or more days delinquent on any debt, or having a credit report that shows default, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of a federal student loan debt during the five years preceding the date of the credit report.

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How do credit reports affect Parent PLUS loans?

Answered by Mark Kantrowitz

The Federal PLUS loan is available to graduate and professional school students and parents of undergraduate students. Eligibility is based on the borrower’s credit history, not demonstrated financial need. As such, it is vital for prospective borrowers to review their credit reports before applying for a Federal Parent PLUS loan or Federal Grad PLUS loan.

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How long does it take to apply for financial aid?

Answered by Mark Kantrowitz

The application season for the Free Application for Federal Student Aid (FAFSA) opens on January 1 of each year. (The start date for the CSS/Financial Aid PROFILE form is October 1.) After the family completes the FAFSA, it can take several months for the college financial aid office to determine a student’s financial aid eligibility. The family will then have a few weeks to decide whether to accept the offer of admission and the financial aid package.

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What are the FAFSA deadlines?

Answered by Mark Kantrowitz

The federal government, state governments and each college and university have their own deadlines to submit the Free Application for Federal Student Aid (FAFSA). While the federal FAFSA deadline is June 30 of the award year, state FAFSA deadlines and college FAFSA deadlines are often much earlier. Some award aid on a first-come, first-served basis.

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Do I have to file the FAFSA every year?

Answered by Mark Kantrowitz

Yes, most academic financial aid offices require that you re-apply for financial aid by completing the FAFSA application every year you're enrolled in school. One important reason you should fill out your FAFSA every year: your eligibility for financial aid can differ from year to year. Factors that can affect your financial aid eligibility can include changes in your family's economic status as well as the number of family members enrolled in college at the same time as you.

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How long does it take for my school to receive my FAFSA data?

Answered by Mark Kantrowitz

Depending on whether the Free Application for Federal Student Aid (FAFSA) is completed online at www.fafsa.ed.gov or on paper, it can take up to two weeks to process a student’s FAFSA and send a Student Aid Report (SAR) to the student. The school will receive the Institutional Student Information Record (ISIR) at the same time as the student receives the SAR. The ISIR contains the same information as the SAR, including the student’s expected family contribution (EFC), but in an electronic format.

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What's the status of my FAFSA?

Answered by Mark Kantrowitz

If you've completed and filed your FAFSA online, you can check the status of your application within 3-5 days; however, if you filed a paper FAFSA, you can only check your application status once it has been processed. Note that processing a paper FAFSA can take between 7-10 days. The best way to check your FAFSA application status is to log in to your FAFSA account online or by calling the Federal Student Aid Information Center's toll-free number: 1-800-433-3243.

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How do I apply for a Parent PLUS Loan?

Answered by Mark Kantrowitz

The Parent PLUS loan application process can vary from school to school. In some cases, parents can apply online through StudentLoans.gov, while other schools may require the parent to start the application process through their own system or on paper. To find out how the process will work for you, you should contact the financial aid office at your student's institution.

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What's the difference between a paper or PDF FAFSA and FAFSA on the Web?

Answered by Mark Kantrowitz

FAFSA on the Web (FOTW) is the online version of the Free Application for Federal Student Aid (FAFSA). Electronic filing of the FAFSA is faster and more accurate than filing a paper or PDF version of the FAFSA. The online version of the FAFSA includes intelligent skip logic to omit irrelevant questions, thus, saving time. Applicants may be able to use the IRS Data Retrieval Tool (IRS DRT)to transfer data from their federal income tax returns into the FAFSA.

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What's the difference between a FAFSA and a Renewal FAFSA?

Answered by Mark Kantrowitz

The Renewal FAFSA is available to students who filed the Free Application for Federal Student Aid (FAFSA) during the previous award year. It uses demographic data from the previous year’s FAFSA to pre-fill this year’s FAFSA. This can significantly reduce the time it will take to complete the FAFSA.

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What's a FAFSA PIN?

Answered by David Levy

The Federal Student Aid PIN, sometimes called a FAFSA PIN, serves as an electronic signature for completing the Free Application for Federal Student Aid (FAFSA). The PIN also provides access to the student’s or parent’s personal information in various U.S. Department of Education systems. It's like the Personal Identification Number (PIN) that a consumer uses to access his or her bank accounts from an ATM.

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Where should I mail my completed paper or PDF FAFSA?

Answered by Mark Kantrowitz

Students should complete the Free Application for Federal Student Aid (FAFSA) online, because the online form is quicker and more accurate. The online form has intelligent skip logic to eliminate unnecessary questions and edit checks to detect and correct the most common types of errors. Students who complete a paper or PDF version of the English or Spanish version of the 2014-2015 FAFSA, sign a signature page or make corrections on a Student Aid Report (SAR) will need to mail the completed form to one of the following postal addresses.

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Do I need to file the FAFSA to get an unsubsidized Federal Stafford loan or Federal Parent PLUS loan?

Answered by Mark Kantrowitz

Eligibility for the unsubsidized Federal Stafford loan and Federal Parent PLUS loan does not depend on demonstrated financial need, unlike the need-based subsidized federal loans. Even students from wealthy families may qualify for an unsubsidized Federal Stafford loan and Federal PLUS loan. However, students and their parents, if the student is considered a dependent student, must file the Free Application for Federal Student Aid (FAFSA) at www.fafsa.ed.gov to qualify for the unsubsidized Federal Stafford loan and the Federal PLUS loan, even if they do not expect to qualify for need-based federal student aid.

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What should I do if my parents refuse to file the FAFSA?

Answered by Mark Kantrowitz

Parents are sometimes unwilling to submit the Free Application for Federal Student Aid (FAFSA) and/or other financial aid forms. But, parental information is required on the FAFSA of a dependent student, so a dependent student will not be able to qualify for need-based federal student aid without his or her parent’s help. There are many reasons why a parent may be unwilling to complete the FAFSA.

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What are the benefits of consolidating private student loans?

Answered by Mark Kantrowitz

A private consolidation loan may make it easier to manage student loan payments after graduating by combining several loans into one, reducing the number of loan payments. It can also lead to a lower loan payment by stretching out the term of the loan which can also increase the total interest paid over the life of the loan).

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Is a cosigner required to obtain a private consolidation loan?

Answered by Mark Kantrowitz

Private consolidation loans are similar in many ways to private student loans. If the primary borrower does not satisfy credit criteria, a cosigner may be required. Recent college graduates may not have long enough of a credit history to qualify without a cosigner. Even if the borrower can qualify for a private consolidation loan without a cosigner, adding a cosigner may yield a lower interest rate.

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Do private consolidation loans offer cosigner release?

Answered by Mark Kantrowitz

Some lenders offer cosigner release as an option on their private consolidation loans. Typically, these require 12, 24 or more months of on-time payments by the primary borrower. The primary borrower must also satisfy credit criteria. In practice, it is difficult to qualify for cosigner release. The credit criteria are often very strict because the lenders are aware that the cosigner may have been secretly helping the primary borrower make his or her monthly loan payments. The last thing the lender wants to do is have the primary borrower default a few months after the cosigner release is effective.

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What types of private loans are eligible for consolidation?

Answered by Mark Kantrowitz

Most private student loans are eligible for consolidation. The criteria usually depend more on the accreditation status of the school than on the type of private student loan. Most lenders, however, will not allow borrowers to use a private consolidation loan to refinance federal education loans. Generally, refinancing a federal education loan into a private loan is not recommended. Usually the federal education loans have lower fixed interest rates, so a private consolidation loan may cost the borrower more.

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What is the interest rate on a private consolidation loan?

Answered by Mark Kantrowitz

Interest rates on private consolidation loans vary with the lender. Typically, the interest rate is based on the credit score of the borrower and the cosigner (if any). A better credit score will lead to a lower interest rate.

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Does a private consolidation loan save the borrower money?

Answered by Mark Kantrowitz

It depends. A private consolidation loan may reduce the monthly payment by increasing the term of the loan. But, while this may make the monthly payment more affordable, it does not save the borrower money. Increasing the term of the loan often leads to more interest being charged over the life of the loan.

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How long does it take to get a private consolidation loan?

Answered by Mark Kantrowitz

Typically it takes 30-60 days from loan approval until the private loan consolidation is complete. Providing the lender with complete information about the borrower’s loan id number or loan account number and the contact information for the lender may help cut the time required to pay off the old loans.

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What are the loan limits for private consolidation loans?

Answered by Mark Kantrowitz

Loan limits and minimum balance requirements vary by lender. Some will allow borrowers to get a private consolidation loan for as little as $7,500 or $10,000. Others require a higher initial loan balance. The loan limits may vary based on whether the borrower has an undergraduate or graduate degree.

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How long is the repayment term for private consolidation loans?

Answered by Mark Kantrowitz

The length of the repayment term varies by lender, typically 15, 20 or 25 years. Lenders offering fixed interest rates may have shorter repayment terms. The repayment term may depend on the amount borrowed.

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Are there any penalties for prepayment of private consolidation loans?

Answered by Mark Kantrowitz

As with all federal and private student loans, there are no prepayment penalties for making extra payments or paying off the balance early.

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Are there any fees on private consolidation loans?

Answered by Mark Kantrowitz

Some lenders charge a fee on their private consolidation loan, while others do not. Some lenders roll the fees into the interest rate, leading to a higher interest rate on a no-fee loan.

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Are there any repayment discounts for private consolidation loans?

Answered by Mark Kantrowitz

Some lenders provide auto-debit discounts for making automatic monthly payments by direct debit from a bank account. Typical discounts include an interest rate reduction of 0.25% or 0.50%.

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Does the private consolidation loan have to be approved by the school?

Answered by Mark Kantrowitz

Private consolidation loans are generally not school-certified since they are refinancing existing private student loan debt after the student has graduated.

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Does private loan consolidation affect the borrower's credit rating?

Answered by Mark Kantrowitz

Consolidation can increase or decrease the credit score or leave it unchanged. Consolidation reduces the number of loans, but is usually not treated as new indebtedness since it is replacing existing loans. If consolidation reduces the monthly payment through a longer repayment term, it may improve the borrower’s credit score by reducing the debt-service-to-income ratio.

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