Understanding the Student Loan Program

Understanding your student loan program can save you time and help you get through the paperwork easier.

How it Works

First, you will have to fill out a Free Application for Federal Student Aid (FAFSA). This can be done online and the website will guide you through the process. Be sure to have tax information and similar items ready, as well as your social security number.

Once your FAFSA is filled out, your chosen college will send you paperwork, which will include the loan application. Complete this loan application and do the Entrance Counseling Tutorial and Quiz, which will explain the Direct Loan program most colleges are converting to, and sign the Master Promissory Note, which is the promise to pay back what you borrow. If you do not sign the Master Promissory Note, you will not be able to attend classes until you do. After you have taken care of these items, the school will then be able to originate and disburse loan funds, which will pay for your classes, books, and whatever else you may need.

Note: the loans will go directly to the school, the school will pay for your classes, and books if you received a book waiver, and any amount left over will come to you in the form of a check.

What if I Have Never Borrowed?

If the student has never borrowed before and the college has not had three years with the default rate below 10 percent, the student will have a 30-day delay from the start of the quarter to the disbursement of the loan, and if the loan is in one quarter, it will be divided into two disbursements, one at the beginning (or at the 30-day mark if the student has never borrowed before), and one mid-quarter.

When Is the Loan Due?

Loan principles are not due until the student is out of school for six (6) months. Subsidized loans do not accrue interest while the student is in school. Unsubsidized loans accrue interest while the student is in school and the student can pay the interest quarterly, if they choose. If it is not paid, it will turn into principal, which increases the principal amount interest is based upon.

At the end of the student’s education, loans can be consolidated to decrease the monthly payment amounts.

There are several programs that forgive the balance or part of the balance of student loans after the student has paid for a period of years. Two examples are teachers and civil servants.


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