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By Charlene Little

How to secure student loans

If you are new to applying for student loans, it can be an extremely intimidating experience. While approaching the topic can be a bit daunting, securing student loans is not as difficult as it may seem. Because of the current state of the U.S. economy, most students turn to federal student loans to reduce their long-term risk. Federal student loans are easier to obtain than private student loans, and they are also easier to pay back after you graduate.

Before you begin applying for student loans, you should take some time to work on your credit. The better your credit rating is, the lower your interest rate will be. Aiming for a credit score of 620 or higher is ideal, but not necessary. Just keep in mind that the lower your credit rating is, the higher your interest rate will be.

Unlike many student loan lenders, the federal government is the easiest way to secure a student loan. Unlike most loan programs, they do not take a considerable amount of time to approve a loan. If you have a lower base income, you may qualify for special privileges, such as subsidized student loans and possibly grants. Unlike student loans, grants do not have to be paid back.

Where to apply for student loans

You can apply for student loans through a private lender, or through the federal government. Most people apply for student loans through Navient, the company that used to be called Sallie Mae. This process involves filling out an annual FAFSA form. The results of this form and the information you provide, determines how much money you qualify for in the form of grants, subsided loans and unsubsidized loans.

Interest rates and repayments

If you choose to apply for private student loans, the interest rate that you will pay depends on your credit score, and possibly your parent's credit score. However, if you apply for federal student loans, your interest rate will depend on the type of loans you qualify for.

For example:

Direct subsidized student loans for an undergraduate is approximately 4.66 percent.

Direct unsubsidized loans for an undergraduate is approximately 4.66 percent.

Direct unsubsidized loan for a graduate student is approximately 6.21 percent.

Direct Grad PLUS loans for a graduate student is approximately 7.21 percent.

Paying interest on loan

A great benefit of receiving student loans through the federal government is that you have two options when it comes to paying the interest. If you want to reduce your long-term bill, you can pay on the interest your loans are accumulating while you are still in college. If you do not have the available finances while you are still in college, you can wait until you graduate and pay the interest with your student loans.

Future incentives

Due to the decrease in the number of people choosing to attend college, the federal government is planning to reduce the interest rate on student loans dramatically. This is going to be used as an incentive to draw more people into the college environment and hopefully increase the quality of education that American students receive.

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