Apply for a student loan despite bad credit.

FREE INFORMATION ON STUDENT LOANS: Student Loans Tips

 
Apply for a student loan despite bad credit

Gone are the days when your needs as a college student were minimal. Nowadays, everything comes at a price and the overall educational cost is phenomenal. However, there is no need for college students or their parents to despair, as loans for U.S. collegiate students are now available to enable the students to fulfill their educational aspirations unless, of course, their parents are plagued with bad credit.

How to apply for student loans.

To tide over this problem of bad credit, Federal student loans are being offered making it easier for students as the interest rates are low and collateral on credit checks is not required. Moreover, these are long-term student loans with options to defer the payments and with softer credit requirements. These student loans are also known as Stafford loans and they are of two types. The first type is the Federal Family Education Loan Program (FFELP) wherein banks and credit unions provide student loans, which are guaranteed by the federal government against default. The second type is the Federal Direct Student Loan Program (FDSLP) wherein the U.S. government gives out loans to the students directly but under the administration of the lending schools.

Types of Stafford Loans

The Stafford loans are of two types. In the event of the government paying the interest during the course of education of the student and where the student has proved the financial need, the loan is known as a Subsidized Stafford loan. However, if the student has to pay the accrued interest within six months of graduating, this loan is known as Unsubsidized Stafford Loan. Obviously, the total cost of this loan is higher due to the deferred payment. The upper limits of both these types of loans are $2,625, $3,500 and $5,500 for the first, second and remaining years respectively. The applicable interest rate is 3.37% as of June 30, 2005 with likely changes on July 1st every year.

Criteria for qualifying for student loans.

To qualify for the federal student loan, the basic criterion is financial need. However, there are other factors also which will be considered by the financial loan administrator of the educational institution where you wish to pursue your studies. Besides qualifying for financial needs, you should also either have a high school diploma or a General Education Development (GED) certificate. As an alternative, you could also pass a test approved by the U.S. Department of Education. You also need to be a U.S. citizen or an eligible non-citizen with a valid social security number and you should be pursuing an eligible program toward a degree or certificate. You should also be registered with the Selective service and your academic progress in school should be satisfactory.

How to repay a student loan.

The most important thing to remember while borrowing any type of loan is that ultimately the loan has to be repaid. However, in the case of student loans, you could either repay the principal and interest after completion of the education or you could pay the interest during your school days and repay the principal amount after completion of the educational program. Your parents could benefit from the fact that the interest payments are tax-deductible. An application for student loan can be made at any time and pre-approval can also be obtained in a very short time. There are many banks, credit unions and other financial institutions that offer Federal Student Loans. The Internet is the best place to look for such loans.