loans

Overview of Student Loans

Finding money to pay for your education can be as nerve wracking as getting admission to a college of your dreams. With tuition costs increasing drastically every year, more and more students are turning to student loans to help pay for their education. This article will help you understand the various student loan options you have and hopefully this will make your search a little easier.

First and foremost, before you even contemplate a student loan, you should look for a scholarship program or a student grant such as a pell grant that will help you cover the costs of your schooling. Why are scholarships and grants better? Simple, you do not have to repay them. That said, it is rare for a scholarship or a grant to cover your entire education costs so a student loan might be something you have to look into at some point. Nevertheless, you should always first start your financial aid search by exploring various scholarships and grant options failing which you should then consider a student loan.

Types of Student Loans

There are basically two types of student loans

• Federal Student Loans
• Private Student Loans

Federal Student Loans

Federal student loans are those that are funded or guaranteed by the government or more particularly The U.S. Department of Education Federal Student Aid (FSA). Federal Student Aid (FSA) accounts for nearly 70% of the financial aid given to students. Both undergraduate and graduate students can apply for a federal student loan. You will have to be enrolled in a participating school and in an approved program. Federal loans are decided based on the need of the student.

Perkins Loan

The Federal Perkins loans is a low interest loan that is made available to extremely financially needy students. Perkins loans have one of the best interest rates on a student loan. No interest is charged when the student is in school and payments begin after a deferment period of 9 months after the student graduates from school or if their enrollment drops below 50%. Read more about Perkins loan.

Stafford Loan

Federal Stafford loans are federally funded loans that are again low interest loans and generally long term as well. A Stafford loan can be subsidized or unsubsidized. In the case of subsidized Stafford loans, the government pays the interest accrued on the loan when the student is in school. Unsubsidized Stafford loan requires the student to pay the interest on the loan. Usually you can get a deferment or make interest only payments on an unsubsidized loan while the student is in school. The loan terms for a Stafford loan is 10 years. Read more about Stafford loan

PLUS Loan

A PLUS loan or also called Parent PLUS loan is a loan that is given to the parents of a qualified undergraduate student. PLUS stands for Parent Loan for Undergraduate Students. A students parent is responsible for the loan and is meant to cover the costs of education of the student’s undergraduate program less any other financial aid. The term for a PLUS loan is usually 10 years. Read more about PLUS loans.

Private Student Loans

Once you have exhausted all your federal funding options or if you need more money to cover the shortfall from your existing aid you can then approach private institutions such as banks and credit unions for a student loan. These loans are called private student loans. Private loans are not guaranteed by the government. The interest rates and payment terms are set by the lender. Read more about Private Student Loans

Getting financial aid and the right student loan is a long process. Plan ahead and do it early so that you are prepared when the time comes to be able to choose between multiple options rather than have to settle or be arm twisted into a less than premium student loan.

A very popular question around the Canadian student visa process is how much to show the Canadian embassy when applying for a student visa to Canada? The answer is pretty straightforward. All you need to work on is arranging enough funds that will support your living expenses while you are in Canada as a student and your tuition costs as well.

So basically if you are looking at about $10,000 to $15,000 CDN as your living expenses, you will need to add to that the cost of your education, basically your tuition costs and that is the amount you need to show to the Canadian Embassy. You can show financial proof in the form of your bank statements (usually for a period of 6 months) or you can show a letter of sponsorship along with the sponsors bank statements showing the required funds.

Additionally, if you’ve qualified for a scholarship or grant be sure to show documented proof for the same. This will help in lowering the amount of money that you need to show.

We get many questions on this top and I hope this answers the question. A sampling of the questions are below.

• “Can someone tell me the amount of money we have to show the Canadian embassy for a student visa ?”
• “How much bank balance is required for a Canadian student visa?”
• “Can I show a relatives bank account towards my student visa for Canada?”
  

‘Refinancing’ your student loans is done using the Federal Consolidation Loan Program. The Dept. of Education licenses various lenders to participate in the program. The process is pretty simple and straightforward. You have two options either apply online or call a lender directly. Either way they’ll collect:

1. Name, Address, Phone, Social Security Number
2. List of loans you would like to consolidate (they will walk you through your loan file for you to let you know what is available)
3. Two References

Once that’s complete the lender will let you know what your payment options are and you can either sign electronically or through the regular mail. All in all it should take no more than 10-15 minutes.

If you are trying to consolidate PLUS loans that were used for your education, if you did not sign for the loans (a parent or cosigner) the Dept. of Education requires their signature for those loans. A lender will be able to walk you through how its done.