Are you ready to go back to school but nervous because the bank account is low? If so, we have good news for you. The U.S. Department of Education has a loan program available to help you afford college. Since it is a loan, it means the money must be paid back to whoever you borrow it from, however, you don’t have to start paying back the loan until six months after you graduate, or drop below part-time status.
The first thing you will want to do is complete the Free Application for Federal Student Aid, more commonly known as the FAFSA. This application will help your school determine what federal loans, and possibly grants, you qualify for. You can complete and submit the FAFSA online at www.fafsa.ed.gov. One advantage about the FAFSA is it awards grants based on financial need instead of a credit score. Federal student loans are available to all students, unless you have already borrowed your lifetime maximum or are in default on a previous student loan.
Once your FAFSA is completed, you will see an estimated amount of loans and/or grants you qualify for. Your school will receive the same information and will provide you with a budget showing the tuition costs along with your financial aid. Typically, undergraduate students receive between $5,500 and $12,500 per year in the form of subsidized and unsubsidized Loans. The loan amounts are based on different factors, including year in college.
Here are some terms that you will want to become familiar with in order to better understand your financial aid:
- Direct Loans. Your educational loans from the U.S. Department of Education are referred to as “Direct Loans” because the program is called the William D. Ford Federal Direct Loan Program.
- Interest. When you borrow a loan it accrues interest, which is a percentage of the total loan amount. Basically, this means you pay back more than the cost of the loan, but fortunately Direct Loans have a much lower interest rate than alternative loans..
- Financial aid office. When you’ve completed your FAFSA and need to know the next step, contact your school’s financial aid office for assistance.