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Student Aid FAQ

How to Pay for Grad School
Answered by Elaine Griffin Rubin on 01/03/2020

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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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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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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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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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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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 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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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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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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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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