School Loan

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College School Loan Basics

It used to be enough to possess a high school diploma in order to get a good job. Nowadays, a college degree is practically mandatory for any sort of high-paying job. Unfortunately, university is very expensive. Even when you go to a state school with discounted in-state college tuition, college costs usually exceed those of automobiles and homes. While most families do not have the particular means to pay money for a multi-year college education, there’s help available in the form of a school loan.

The school loan comes in 2 different flavors. The need-based school loan is for borrowers who require advice about paying for an education and therefore are designed to meet some of the educational costs. The non-need based school loan helps to pay a portion of the loved ones contribution when funds are scarce.

For both graduate and undergraduate students, the Federal Stafford Loan supplies a simple-interest, collateral-free, government guaranteed school loan. While the student continues to be in school, interest accumulates at a lower rate. The interest rate is fixed and does not adjust up or down during this period. When the Stafford school loan is taken out, there is an interest cap that is imposed. At no time during the lifetime of the loan can the eye rate rise above this cap. When the student leaves school or graduated pupils, they are given the six-month grace period before they need to begin payment of the loan.

The Federal PLUS school loan, or Father or mother Loan for Undergraduate Pupils, is similar to the Stafford loan. It is non-need based, and is also no-collateral, simple interest, and federal government guaranteed. PLUS lending options allow parents of undergraduate students to borrow up to the full quantity of college costs, a smaller amount any financial aid, awards, or scholarships. In addition loans are up to 10 years in length and there’s no penalty to pre-pay the loan in full. Mothers and fathers can begin payment as the student is still signed up for school.

These loan choices sometimes do not cover each and every penny of all school expenses. When a distance exists between lending options and actual costs, alternative loans could be sought. Many lenders provide private student loans which can be similar to the government student loans. They have low rates, no fees, deferred transaction, and multiple pay back options. Another option is for parents to borrow towards their home equity in order to finance a college education. While this option offers income tax advantages, a home fairness loan does not have the same kind of flexibility as federal student loans. For example, when financial hardship develops, federal student loans can be placed in forbearance. Home equity loans cannot. As well, loans can be consolidated into one college student school loan that has adaptable repayment options. Home equity loans generally only have a single repayment option.

Comments: 32

  1. Will March 22, 2013 at 2:43 pm Reply

    Well obviously the school loan was for school and the credit card was to take care of the book fees. I just wanted to ask if they can take from my bank account or how that works? Thank you for your answers!

  2. Roger May 24, 2013 at 4:07 am Reply

    How do school loans work? I have paid 2300 dollars on my loan this year and only 650 has been put towards the principal? The rest interest? I have a 6.25% interest rate. Is this correct or is something wrong with this picture?

  3. Miss June 5, 2013 at 8:17 am Reply

    I got a school loan 17 years ago and I sent a payment in 6 years ago and they claimed they didnt receive it I tracked the money order down and showed they cashed it and i confronted them and since then they have not sent me another bill or called me about the loan. This year I want to file income taxes but afraid they will garnish it and I wont receive nothing.

  4. Jo July 15, 2013 at 5:47 pm Reply

    I’m 37 and have made alot of poor decisions in my life. I have a horrible credit score and have always had a hard time keeping a job. I want to change my life around and enroll in school. Will very poor credit and a poor work history stop me from getting a school loan? I know that some get approved for money to pay for living expenses as well. Do I have a slim chance?

  5. Dulcie August 6, 2013 at 12:11 am Reply

    I would rather have a scholarship, but have to wait a couple weeks to see if I receive one. In the mean time, I could accept a school loan, but would this affect my eligibility for a scholarship?

  6. Janean August 27, 2013 at 1:21 pm Reply

    My company will reimburse my grad school tuition based on my grade for each class. Am I supposed to get a loan first and pay off the loan with the reimbursement money, or do I wait til the end of the semester to pay the tuition? Any good sites for grad school loans?

  7. Willard September 19, 2013 at 2:21 pm Reply

    My last school loan has been in default for over a year since I am financially unable to pay it. What is it called when they take your income tax return to pay it and how can I find out if they are going to do tht or not?

  8. Kip September 28, 2013 at 7:51 am Reply

    I have a large school loan that went in to default because i was in a very bad car accident and could not make the payments. Now I am on disability I get a monthly check. After i pay rent and utilities I have maybe 200.00 left for food and meds. I tried to make arragement with them to send 50.00 they said they would put a note that I refuse to pay. They want me to pay 275.00 a month or they will take my husband tax refund.( he was not around when i got this debt) or sue. What can I do? HELP

  9. August October 7, 2013 at 9:06 am Reply

    My mom’s credit is not good enough for her to be a co-signer on my school loan , Is there any business that will let my mom be a co-signer for me?

  10. Steven October 8, 2013 at 12:45 pm Reply

    I’m just curious, which websites and or companies are the easiest and best to apply for a school loan? I’m planning on attending EMT school in the Fall and I’m afraid I won’t be able to save enough in time.

  11. Nathanael December 11, 2013 at 11:59 am Reply

    If a poor kid who gets a pell grant and a middle classed kid who gets a school loan gets the same degree and the same job/salary in the end why does the pell grant kid not have to repay the money they received from the government?

  12. Sallie December 13, 2013 at 2:26 am Reply

    Are there any ways to obtain a private school loan through a reliable and trustworthy source during these difficult financial times? I know it is kind of a crazy question, but I am going to need this small loan ($4000) for the next fall semester. I am only eligible for a private loan as well.

  13. Caleb December 13, 2013 at 8:41 pm Reply

    I am trying to get back into school and I want a small school loan, but I want a company that I can trust. This is definately un-needed, but it would also be very nice to loan from a company that gives incentives for paying back on time like Sallie Mae does.

    Thank you for your time!

  14. Antione December 26, 2013 at 9:56 pm Reply

    I have a school loan through the state out California that is in default. I figured when I file my taxes this year they will withhold all of the money from me because of that loan but someone told me they can only take my state tax and they can’t touch my federal money. Is this true?

  15. Vergie February 2, 2014 at 1:42 pm Reply

    I work retail and earned about 30k this year. However i screwed up my credit a year ago and is slowly paying my credit cards which went into collections…about $3900.00 I can’t apply for a loan because of my credit but will i be able to apply for a school loan on my own?

    I live on my own and have no contact with my adoptive parents who disowned me and don’t have anyone who could co-sign for me. Is there a way around this? Help anyone or suggestions would be good.
    I’m 21 turning 22 and just payed off a 12k car so aside from my credit cards…im okae.
    I was able to get financial aide for 1 yr. when i tried to do school. I did at that time get professional judgment because i wasn’t a ward of the court but* i did at that time have statements from my highschool counselor and principal who knew my situation. From there i was able to get financial aide.
    My parents at that time pretty much disowned me right before i turned 18 (a couple of months befor) and right befor my highschool graduation.

  16. Florance February 2, 2014 at 5:59 pm Reply

    I’m attending (or was) college with finanaical aid and loans. 2 years ago2009, I some how needed to pay 2,000 out of pocket for some “fee” for student accounts, even though I didn’t know where that fee came out of. I paid it off because at the time I was 6-10 months into school and thought I didn’t fill out a loan or finanical aid out correctly. (even though that school would never contact me about missing documents or answer any of my emails, until the last minute) I had told school that I WILL pay the 2000 if ONLY this fee or ANY out of pocket fee would never ever happen again since I’m a first time student straight out of High school with no money, parents don’t have money and I dont work/wouldn’t be able to ever pay anything off that has to do with large money. (I said this because I was fresh into school and didn’t really have alot of loans to pay off from school, i was only in school for 6-10 months and if they would have told me that the fees would happen again, I would have just left school and paid off my small amount in finanical aid/loans) they told me that it wouldnt happen again etc etc. Around march 2011 I was supposed to start classes again until student accounts called and said that I owe 8,464 out of pocket, even though while I was in classes, I had been approved on the loans/finanicial aid to pay during those classes. I told student accounts that I would search for a private loan of 8,464 because I’m only 4 classes away from graduating and since student accounts told me that there was nothing else I could do except get a private loan, I told them to just wait, that I will pay it off because they told me if I didnt pay, it would be sent to a collections agency, I just checked my account and now my fee is 17,000 and sent to a collections agency. How do I pay the 17,000 now? to go on with school, I’m so close to graduating.
    I wasn’t droped out of school, I finished and passed my classes in 2009 and everything was good, right after I finished my classes, 2 days later they told me to fill out documents, I did then a day or so (week after finihsing my classes) they said that I had money owed to students accounts of 2,000. Out of no where.

    My father would be a co-signer and has good credit. But my school is crazy.

  17. Mike February 17, 2014 at 5:12 am Reply

    Is there anything that would prevent banks from allowing a med hopeful from getting a loan for medical school? Aside from the obvious things like being in bankruptcy, are there other things that money lenders look at?

  18. Calvin February 21, 2014 at 11:32 pm Reply

    If the money from the loan is sent to the college then how do i get money to use on things like books & school supplies like a laptop? Im new to the school loan thing and i just don’t understand. They say u can use your school loans for housing, transportation & computers but how does that work?

  19. Eugene February 22, 2014 at 3:20 am Reply

    My husband is driving me nuts. He has been in and out of work for three and a half years. I have finally talked him into attending school. I filled out his fafsa loan/grant application and have been working on his to do list at the community college he will be attending. The thing is that we will not know the amount of the award until August the 8th. At this point I am sorry I suggested this because he plans on taking the full amount to buy a car and fix it up. He has been without a car since May of this year. I have been the only income except for the time he collected unemployment and the odd jobs he has taken. From what I see he is not interested in school. He wants the money and that’s it. I realize the man needs a car, we live in central Az. and the public transit is not the best. I just don’t know. I can’t even reason with him anymore. He acts like a desperate man ready to skip town.

  20. Fabiola February 22, 2014 at 8:38 am Reply

    i already signed my contract…however i took out a school loan of 5k.. will the army pay it off for me? or will i have to pay it regardless?

  21. Tad March 6, 2014 at 10:41 am Reply

    I have school loans and I owe thousands but I always make payments on time every month. However, I recently checked my balance and it was a surprising zero! I clicked on make a payment option and We are unable to accept an on-line payment for your account at this time.
    This could be related to one of the following reasons: •You have paid your loan(s) in full
    •Your loan(s) was paid in full by a consolidation
    •Your loan(s) has been transferred to another servicer
    •You have defaulted on your loan(s) and a claim has been filed with your guarantor or assigned to Default Management Collection Services (DMCS)

    it was it said.

    I didn’t default on my loan(s). I don’t know what some of these options mean? Consolidation? Did some possibly pay my loan? What happened to my loan? Did it transfer to another loan agency?

  22. Annetta March 8, 2014 at 3:35 am Reply

    Any advice on paying for college and receiving/obtaining school loans?
    Seems a little crazy trying to figure out how to pay for school and how much you can work, etc.
    I am still doing jr college.

  23. Gregory March 9, 2014 at 6:57 pm Reply

    Ok so thinking of my school loans has kept me up at night several times throughout my education! I will be graduating in roughly 5 months with my bachelors in nursing and I have a whooping 38k in student loans. I am getting 5k in January and I am planning to put that toward my school which would leave me at around 33k (if student loans even work like that). I was feeling confident since I am married and my husband currently pays all of our bills since I have been working at a nursing home only once a week and making only enough for my gas to get to school and run errands. Well our plan was to keep living like this with the majority of my paycheck to go towards my student loans for ONE year and then just make a smaller payment and he continue to pay our bills which is not very much since we do not pay rent thanks to my lovely parents. However, I do not want to be here anymore but am willing to make a sacrifice for another year to cut the loans off a bit. I have a job secured at my work now as I have already been told I would be hired immediately at $25( not sure what that would come up to biweekly after taxes).

    So I guess my question is could someone help me understand how student loans work, I only have federal loans some 6.8% and the other only about 4%. If I make extra payments will they go towards my principle or will it all go towards my interest rate? As of now I am thinking of giving half of MY monthly income to my loans so maybe 1500 a month. Help. I really regret getting these loans and am starting to freak out now that graduation is getting closer. And what is freaking me out more is the fact that I read how people are paying their loans and their principle never goes down.

  24. Brady March 9, 2014 at 6:58 pm Reply

    is there a school loan that doesnt require 2 years of employment, without a cosigner? cause right now im trying to work, but its hard, im now losing another job because my school is interfering with work, and im not missing school. i only need maybe $5,000 to $6,000 to get by comfortably. i rent $125 a month and insurance, $165 and then $100 for spending. gas food, ect. and i graduate in just under a year. and that providing i dont go back for my batchelors. is there a loan out there that will cover this? one i dont have to pay back untill i finish school?

  25. Lesley March 9, 2014 at 6:58 pm Reply

    Well if you only have enough financial aid for tuition, would you get a school loan like for books or other supplies that you need? (Federal Direct Loan)
    what are pros and cons about these loans? thanks.

  26. Lou March 15, 2014 at 4:30 pm Reply

    So Im going to school for Nursing. I need to know if anyone got a loan for “Cost of Living” and/or Financial Aid. Or how any of you Nurses did it. Besides going to hospitals and talking to Nurses, I want to know how some Nurses went about going to school Full-Time while having to pay at-home expenses. Like if you took out a loan through Sally Mae or whatever and then Financial Aid? I need help and advice. I want to quit my job to go to school full-time but I need help with living expenses since I have 2 kids. Sorry for my ranting. Any help?

  27. Pearlie March 15, 2014 at 4:30 pm Reply

    I have a friend who was deliquent on her school loan for years. Her $14,000 loan ballooned to $50,000. A couple of years ago she inherited some money from her mom around $220,000. For some reason she’s can’t get a job. Shouldn’t she pay this full amount off instead of paying all the interest in it. She wants to buy a house eventually.

  28. Shaun March 15, 2014 at 4:30 pm Reply

    I am currently a first year law student and I have a problem. I need a loan to cover spring semester as well as next year. My problem is that my co-signer just became less credit worthy, so the loan they co-signed with me was revoked, and now I don’t have good enough credit to take out the loan on my own, nor do I have anybody that can co-sign for me. I can’t work because of regulations regarding first year law students and working (bottom line, we aren’t allowed, we could get kicked out of school for it) but I definitely need a loan. Help?
    I have FASFA loans, I just need the rest of my tuition covered. I have full FASFA aid, just we only get 20k, and tuition alone is 30k..

  29. Esteban April 2, 2014 at 5:59 pm Reply

    I will be attending graduate school overseas at a US accredited university, however, they do not participate in the US federal loan program. That being said – I cannot get a Stafford loan etc. I was wondering if anyone had any suggestions as to where I should look for loans – ones with good interest rates? (Specifically which banks or credit unions etc). Will these places also defer payments like federal school loans do? If anyone has taken out non federal school loans and could help me out and give me any type of suggestions or information it would be truly appreciated! I didn’t take out any school loans for my undergrad so I am new to this.

  30. Galen April 12, 2014 at 4:42 pm Reply

    When do you start paying off college and medical school loans? I heard you have to pay for college loans right after you graduate, but I also heard you can’t work while in medical school because of all your classes and such. I’m a junior in highschool going to be a senior an I’m already stressing. I have a B average:/. I live with just my dad who pays child support for my other siblings so we were never able to afford to play sports. So I know i won’t be able to qualify for any major scholarships unless I had like a 4.5 gpa, but I don’t. Any advice?:(

  31. Jaime June 21, 2014 at 1:28 am Reply

    I just finished school and have some loans to start on. Which I have the max for (10,000 un-subsidized) and (8500 subsidized) taken out over 2 continuous years. My question is: Will they let me start on the interest bearing ones 1st (the 10,000 loans)? And how stingy and aggressive are they on hounding me for the payments. I hear that some doctors never pay their school loans, some other people care less about paying them. . .etc. I want to pay them, but what if I miss a payment or something? Are they as aggressive as a personal loan (i.e. will they attack your credit, etc)??

    1 other question: would it be smart to consolidate them even if some are subsidized?
    FYI: Reason I ask is because I also have school loans from personal banks (this is med school here) that I think I’m going to want to pay back 1st. What’s the worst that can happen if I delay the payment on fed loans.

  32. Enoch June 21, 2014 at 1:29 am Reply

    If you need a certain amount of money for your school loan based on the tuition of your school, will the bank give you the full amount or are there conditions?

    For example, if I have a lot of credit card debt or if my co-signer has low income – will they deny me the full amount I need for school?

    Another question: Can you ask for more in a loan outside the tuition of the school? For example, if my college says tuition for a year is 20,000, then can I ask the bank for 5,000 more making it a total of 25,000?

    I understand that I must apply for financial aid first. These are just examples.

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