Apply For Student Loans

The new regulations passed by Congress changed some of the basic rules on how to Apply For Student Loans. They tacked these new rules onto the recently passed Health Bill last March. The basic changes are that they have taken the banks out of the business and made it easier for most people to apply for a Student Loan. The interest rate is now at 4.5% and you still apply for Student Loans with the Free Application for Federal Student Aid (FAFSA) and also need to fill out a Master Promissory Note (MPN).

The place you start to apply for a student loan is at your school of choice. The school is responsible to determine eligibility and loan amount. It's also important to review any other possible financial aid benefits offered by the individual schools. Everything from part time jobs to scholarships may be available to qualifying students.

There is a loan fee (sometimes called an origination fee) on any Direct Subsidized Loan, any Direct Unsubsidized loan, and Direct PLUS Loan issued by the government. This loan fee is a cost of borrowing on one of these types of loan. This loan fee is based on a percentage of the amount of the loan the student receives, and is taken from each loan disbursement. In other words the government gets their percentage as the loans are disbursed. The original fee was 1.5% until June 30th, 2010. On July first of 2010 the rate dropped to 1%.

Current interest rates on subsidized and unsubsidized loans first disbursed between July 1, 1998, and June 30, 2006, now has an interest rate for the period July 1, 2009, through June 30, 2010, is 2.48% for loans in repayment and 1.88% during in-school, grace, and deferment periods. Most schools are still working on updating all the information in the latest laws so it's a good idea to check to see exactly what the current interest rate is at the time of your application.

The best way to apply for the federal student aid and loans is by filling out the Free Application for Federal Student Aid (FAFSA) online. The information on your FAFSA application is then sent to the schools that you list on your application. Once the school receives the information, they assess your financial need for student aid. This most likely will involve more than just student loans. And each school may have different loans and financial aid programs. This is the most direct route to apply for a student loan funded by the government.

The next thing that happens once you apply for student loans through the FAFSA online form is you get an Awards Letter from the school(s) you indicated on your application. The school will notify you of the loan amounts that it is offering and that lists any other proposed financial aid items. Remember that the school offers can be different due to different methods of evaluation of your need and also offer different financial aid programs.

You should review financial aid offers carefully. Remember that any loans must be paid back and will have interest included. Be careful to properly budget both living expenses and tution, books, and any other possible fees. You do not have to accept the amount and can lower it if appropriate. Instructions on how to accept, change the amount, and what to do next is included in this correspondence. When you apply for a student loan there are no credit assessments.

There is no minimum amount when you apply for a student loan or financial aid but there are maximums.

Grade Level	Dependent	Independent
1st-year undergraduate	$5,500 (maximum $3,500 subsidized)	$9,500 ($3,500)
2nd-year undergraduate	$6,500 ($4,500)	$10,500 ($4,500)
3rd & 4th-year undergraduate	$7,500 ($5,500)	$12,500 ($5,500)
Graduate	N/A	$20,500 ($8,500)

The amount you may be offered can be below the maximum and there are maximums over the course of your attendance. And Congress can always change these numbers, requirements, and maximums over the total amounts. But as of this latest set of regulations these are the numbers. Each year you apply for a student loan can have some differences so pay attention and read the small print.

And there are a host of other financial aid possibilities such as part time employment, scholarships, grants that are both professional and government funded. And when it comes time to pay back these loans (you are not required to make payments unless you go down to 50% of fulltime attendance) there are quite a few options. But these options will probably change before the next four years so it's best to review when you are about to graduate.

If you have any questions about your awards letter, terms, or any other financial aid items when you apply for a student loan you should always address the school first. Once you have accepted the loan terms you can directly contact the government through the Direct Loan Servicing website.

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