Getting school loans

School loans are one of the easiest ways to pay for college if you do not have enough money to cover your tuition costs on your own. It is almost impossible to graduate from college without taking out student loans. Student loans are the perfect solution if you have been contemplating using your credit card to pay for your schooling. The interest rates on student loans are much smaller from other loans and the payments normally are not due until after you graduate.

Student loans are available through private lenders and the federal government. In order to qualify for a federal student loan, you must meet the `need' requirements. It is similar to applying for grants because they only want to give money to people that truly need it to pay for their schooling. Student loans also vary in size. Depending upon your situation, you may need a larger student loan to cover your tuition, books, and living expenses.

Normally a student loan will come as a subsidized or unsubsidized loan. Even though they are similar, there are some large differences between them:

Subsidized loan

• Does not require payments toward interest while you are in school. The federal government actually pays the interest while you are still in school.
• Once you graduate you need to start making money payments toward interest and the loans.
• Often called a Stafford loan or a Perkins loan because it is based on financial need.

Unsubsidized loan

• Requires immediate payments on the interest amounts and the loan amount while you are still in school.
• The principal payment is deferred while you are in school, but you need pay within 6 months of graduating.
• You can borrow larger amounts of money

How to Get a Student Loan
In order to qualify for a student loan, you must provide the lender with a copy of your high school diploma or GED. Most lenders can access these records on their own, but you will not be approved for a loan if you have not completed your high-school education.

If you need a student loan to pay for college, the first place you want to go is to the Federal Student Aid web site. You need to fill out a FAFSA, Free Application for Federal Student Aid. You must provide all the information the application asks for and submit it before the deadline. Before you fill out the application, speak to the financial office at your school to obtain your school's financial aid code. You also need to ask them if they offer any financial aid packages that can help you.

If you have chosen to go with a private lender like Wachovia, you will need to gather a few financial documents. First, you must provide them with a copy of your tax return from the previous year. They will ask for yours or your parents. They may also need a copy of a recent bank statement or a pay stub.

Before you apply for a loan, it is always a wise decision to obtain a copy of your credit report. You want to check your report for any errors and make sure everything is accurate. Normally a student loan will not be granted to anyone that has a credit score below 650. It is also important to have a credit history before you apply for a student loan. If you have little or no credit history, consider using your parents as a co-signer. This way the co-signer will be responsible for all the payments if you default on your student loan. It is a good idea to have your parents co-sign on the loan even if you do qualify for the loan because they normally can get you a lower interest rate.

Companies like to approve loans to individuals that are not only in good standing with their creditors, but with their community. This means they will do a background check on you to see if you have ever been arrested and charged of a conviction. Anything related to drugs or alcohol will easily cause the lender to deny your request for a loan.

Finding the best Student Loan
When you are looking for a student loan, it is important to check with multiple lenders. Don't just limit yourself to one or to the FAFSA lenders. Talk to your school's financial aid office to find out what lenders they typically work with and ask them for recommendations. Several colleges have their own credit unions or banks and they may be able to offer you a student loan for a lower interest rate than other lenders.

Talk to 3 or 4 different lenders to find out what their student loan interest rates are. If you can compare their re-payment terms and interest rates to the other lenders, you will save yourself money in the long run. You could find that you can easily save $600 in interest by using a private lender if your parents co-sign. Always keep your options open and read through all the paperwork before you agree to the terms of the loan.

Make sure you trust the company you are working with. It is always a smart decision to go on the internet and find out how they have treated other customers. Have they been fair to them? Do they have a variable interest rate that can skyrocket after you graduate? What happens if you miss a payment? Always know who you are working with before you sign-up with them.

How much money do you need?
Since it can be fairly easy to obtain a loan (if you are approved) you need to watch your spending closely. Usually the loan payments will go directly to the college and the left-over funds will be sent to you. This money needs to be used wisely, do not just spend it anything you want. You should always calculate how much money you actually need before you apply for the loan. Here are a few things you need to consider:

• How long will you be in school? Are you going to continue on to graduate school?
• Where will you be living? If you are living with family members, do you need to pay rent? How much would it cost to live in an apartment? Consider the costs of food and utilities if you plan to live in an apartment.

• If you plan to move away to college, how much will it cost to travel home for holidays?
• What will your major be? Will the classes require additional tools (like a laptop)?
• How much money do you need for books?
• Is your family contributing any money to your education?

Once you have a good list of all your expenses, it will be easier to determine exactly how much money you need to borrow.

Questions to Ask the Lender
When you are meeting with a lender, you need to be prepared with a list of questions for them. You need to find out exactly what the interest rate is and if you can lock in that rate. Some loans have variable rates and you will end up paying a lot of money in interest fees alone. Find out if the interest will start accruing while you are in school and if you need to pay on it while you are still in school.

It is also important to find out when you need to start paying on the loan. Some lenders will defer all your payments until you graduate while others prefer to have you start paying within 30 days. If you have student loans, what will happen to them if you continue on to graduate school? Talk to your lender to see if they will provide you with enough money to pay for your graduate school also.

You need to find out what types of penalties are enforced for late payments. Will you have a large fee to pay or do they allow a late-payment grace period if it only happens once? What will happen if you graduate and you do not get a job right away? Can the lender extend your payment plan until you find a job?

Student Loan Consolidation
If you graduate from college and you have numerous student loans, you do have the option of consolidating them into one loan with a single monthly payment. There is no cost to consolidate your student loans. The only disadvantage is that you will probably have a slightly higher interest rate, so you are actually going to end up paying more money over the life of the loan. However, if you have 3 or 4 different student loans, you don't have to worry about keeping track of each of them individually. Now you just pay one payment and you don't need to worry about missing a payment and having a harsh penalty enforced upon you. The only trick is that you can only consolidate your loans once. This means, you cannot consolidate again 5 years down the road if you lose your job and the payments become difficult to keep up with.