What's the difference between subsidized and unsubsidized loans?
The main difference between subsidized loans and unsubsidized loans is that the federal government pays the interest on subsidized loans while you are in school at least half time, during the grace period, and during periods of authorized deferment. This makes subsidized loans a less-expensive option.
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How much can I borrow in Direct Loans if I'm an undergraduate?
These limits cover the 2015-2016 academic year for Direct Loans (Direct Subsidized and Direct Unsubsidized Loans). Dependent undergraduate students can borrow: Year 1 – $5,500 (up to $3,500 subsidized); Year 2 – $6,500 (up to $4,500 subsidized); Year 3+ – $7,500 (up to $5,500 subsidized); Aggregate/Cumulative – $31,000 (up to $23,000 subsidized). Independent undergraduate students can borrow: Year 1 – $9,500 (up to $3,500 subsidized); Year 2 – $10,500 (up to $4,500 subsidized); Year 3+ – $12,500 (up to $5,500 subsidized); Aggregate/Cumulative (up to $23,000 subsidized) – $57,500.
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What are the benefits of Direct Loans?
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 Direct Loan, are cheaper, more available and have better repayment terms.
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How do I apply for a federal student loan?
You need to file the FAFSA (Free Application for Federal Student Aid) before you can take out federal student loans, including Direct Loans (sometimes called Stafford Loans) and Perkins Loans.
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Do I have to repay a Federal Student Loan?
By signing the Master Promissory Note (MPN) for a Direct 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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What are the penalties for early student loan payment?
There are no prepayment penalties on federal student loans or private student loans. You can make extra payments on your student loans or pay them off in-full without paying a fee or other penalty.
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How do graduate students qualify for federal financial aid?
To qualify for federal, state, and college financial aid for graduate school, you have to submit the FAFSA (Free Application for Federal Student Aid). The FAFSA is required to receive federal and state grants and scholarships, as well as federal student loans, including Perkins Loans, Direct Unsubsidized Loans, and Grad PLUS Loans.
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How long does it take to apply for financial aid?
The application season for the Free Application for Federal Student Aid (FAFSA) opens on October 1 of each year. (The start date for the CSS/Financial Aid PROFILE form is also 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 benefits of federal student loan consolidation?
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?
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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Are there subsidized loans for graduate students?
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 credit requirements for Grad PLUS loans?
The borrower of a 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.
How do credit reports affect Parent PLUS Loans?
The PLUS Loan is available to students attending graduate school or professional school 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 Parent PLUS Loan or Grad PLUS Loan.
How do I apply for a Parent PLUS Loan?
The Parent PLUS Loan application process can vary from school to school. In some cases, parents can apply online through StudentLoans.gov. To find out how the process will work for you, contact the financial aid office at your student’s school.
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How can I lower my student loan payments?
Student loan payments can be a source of financial stress for many borrowers who are struggling to repay their loans. Every dollar of loan payments is a dollar less that is available for other priorities. So, borrowers sometimes seek to lower their monthly student loan payments.
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What is the average amount of a student loan?
The average federal loan debt outstanding is $28,973 per borrower, as of June 30, 2015.
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How late can I apply for a student loan?
Students can apply for a federal student loan and parents for a Federal Parent PLUS loan up until the last day of classes or June 30 of the academic year, whichever comes first. However, the student must have already filed the Free Application for Federal Student Aid (FAFSA) and the college financial aid office must have received a valid output document, such as a Student Aid Report (SAR) or Institutional Student Information Record (ISIR).
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How long does it take to get a student loan?
There are two aspects to this question: How long does it take to apply for and be approved for a student loan? Once approved, how long does it take for you to get your student loan money? The answers may differ by lender and by the type of loan (federal vs. private).
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When do I have to start repaying my student loans?
Most student loans enter repayment within 6 months of the borrower graduating or dropping below half-time enrollment.
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How long does it take to repay a student loan?
The standard repayment term on a federal student loan is 10 years. The repayment term on private student loans vary from 5 years to 15 years.
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How do I find a creditworthy cosigner for my private student loan?
Most private student loans require a creditworthy cosigner. Borrowers may need a cosigner if they have bad credit or if they have a thin or non-existent credit history. Even when the borrower has very good credit, adding a cosigner can lead to a lower interest rate and higher loan limits. More than 90% of private student loans for undergraduate students and more than 75% of private student loans for graduate and professional school students are made with creditworthy cosigners.
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How do I find student loans if I have bad credit?
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?
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?
The 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 Parent PLUS Loan because of an adverse credit history.
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Can I transfer my student aid to a different college?
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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What are the FAFSA deadlines?
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?
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?
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 should I do if I filed the FAFSA, but got no aid?
Some students will file the FAFSA, but won’t qualify for need-based student aid such as grants, scholarships that require financial need, and subsidized federal student loans. For example, more than half of undergraduate students who file the FAFSA don’t qualify for a Federal Pell Grant or other federal grants. But you do have options if you didn’t receive any need-based aid.
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What's the status of my FAFSA?
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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What's the difference between a FAFSA and a Renewal FAFSA?
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?
The Federal Student Aid PIN, sometimes called a FAFSA PIN, used to serve as an electronic signature for completing the FAFSA (Free Application for Federal Student Aid). As of May 10, 2015, the PIN was replaced by the FSA ID. The FSA ID provides access to the student’s or parent’s personal information in various U.S. Department of Education systems.
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Where should I mail my completed paper or PDF FAFSA?
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 a Direct Unsubsidized Loan or Parent PLUS Loan?
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?
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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Is a cosigner required to obtain a private consolidation loan?
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?
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 is the interest rate on a private consolidation loan?
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?
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?
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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How long is the repayment term for private consolidation loans?
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?
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 repayment discounts for private consolidation loans?
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?
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?
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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What's the difference between scholarships and grants?
Both scholarships and grants are forms of gift aid, which is money for college that does not need to be earned or repaid. Although people often use the terms scholarships and grants as synonyms or interchangeably, there are important differences.
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Is there really a left-handed scholarship?
The Frederick and Mary F. Beckley Scholarship provides a scholarship worth $1,000 to $1,500 a year for currently enrolled left-handed students at Juniata College. Juniata College is a small, liberal arts college located in Huntingdon, Pennsylvania.
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What is a no essay scholarship?
Students do not like entering essay competitions because they don’t feel comfortable writing essays. Some organizations have responded by creating promotional scholarships that do not require any essays.
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Are there really scholarships for twins?
Yes, there are several scholarships available for twins and other multiples, especially identical twins and triplets.
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Are there scholarships for students with red hair?
There is one scholarship for students with natural red hair color, ScholarshipRed. ScholarshipRed offers one $500 scholarship for redheads each year. The scholarship is open to high school juniors and seniors who have natural red hair color, reside in the U.S. and have a high school GPA of at least 2.5 on a 4.0 scale.
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Can I get a scholarship for having an unusual last name, like Zolp?
There are several scholarships for students with unusual last names, such as Zolp.
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How do student loans work?
Most college students will have to borrow one or more student loans before they graduate, because there aren’t enough government grants to cover all college costs. There are more than $100 billion in new student loans made each year and more than $1 trillion in student loan debt outstanding.
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How do I get a student loan?
Students must file the FAFSA (Free Application for Federal Student Aid) before applying for federal student loans, like Direct Subsidized and Unsubsidized Loans, or a federal parent loan, like the Parent PLUS Loan. Students do not need to file the FAFSA, however, to get a private student loan or a private parent loan.
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Can I use my student loans to pay for living expenses?
Student loans may be used to pay for anything included in the college’s published cost of attendance. The cost of attendance includes not just tuition and fees, but also living expenses, such as room and board, transportation to and from school, and books and supplies. In addition, the college’s financial aid administrator can increase the cost of attendance on a case-by-case basis to cover childcare costs for dependents and the cost of a computer and software.
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