Frequently Asked Questions about Student Loans

Here are the answers to some of the most commonly asked questions about student loans.

In addition to taking out a loan, how else can I help pay for my education?

A loan can help you considerably in financing your education, and you can supplement this with funds from other sources. Scholarships and grants are money for your education that you do not have to repay. Scholarships are awarded based on achievements or other criteria. Grants are provided by the government and need-based. Work study can also help supplement your loan money. A work study program offers part-time employment to those with financial need. Your earnings will be limited by the financial aid office of the institution.

What is the FAFSA and do I need to fill it out?

The FAFSA, of Free Application for Federal Student Aid, has to be completed to be eligible for state and federal aid. Many funds are distributed on a first-come, first-served basis, so fill it out ASAP. If you are only interested in a private student loan, however, you do not need to worry about completing it.

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How will my bad credit affect my ability to get student loans?

Private student loans are available to almost anyone, including people with bad credit. A bad credit student loan might cost you a little more in interest, but you will be able to pay for your education. If you have less-than-perfect credit, you might also still qualify for a Stafford Loan or a PLUS loan (for parents). If there are loans you don't qualify for by yourself, recruiting a cosigner might boost your attractiveness as a borrower.

What happens if I can't pay pack my bad credit student loan?

If your loan came from the federal government, you will have to pay back the loan, one way or another. The government has the authority to do things like garnish your wages and withhold your income tax refund if you default on student loans. For private student loans, non-payment would be just like with any other loan or debt. Your debt would probably be referred to a collections agency, and your credit would suffer even more.

Should I consolidate my loans after I graduate?

You want to consolidate your student loans if interest rates are low, and you would like to lock in that rate, or if you would like to lower your monthly payments by extending the life of the loan. Consolidating your student loans can extend the loan, which translates into reduced monthly payments for you. Also, if interest rates are lower than when you took the loan, consolidating can save you a bundle on interest in the long-term. If you have variable-rate loans, consolidating can also help you lock in an interest rate to avoid the risk of fluctuations.