Do you need additional financing for your education? If so, think FEDERAL AID FIRST! Federal loans usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources. Students and parents should always exhaust federal loan options first before considering a private loan.
What is a federal student loan?
A federal student loan enables a student and his/her parents to borrow money to help pay for college through loan programs supported by the federal government. Federal Loans typically have a lower interest rate and offer attractive repayment terms, benefits and options. Federal student loans can be used to pay school expenses such as tuition and fees, room and board, books, supplies and transportation.
How to receive a federal student loan?
You must complete the Free Application for Federal Student Aid (FAFSA) to receive a subsidized or unsubsidized federal loan. RMU will inform you how much financial aid is available, including grants, scholarships, work opportunities and federal student loans. Should you choose a federal student loan, RMU will provide you with instructions on next steps.
What is a private student loan?
A private student loan is a nonfederal loan issued by a lender such as a bank or credit union. Private student loans often have variable interest rates, require a credit check and do not provide the benefits of federal student loans. While not required, we strongly encourage undergraduate students to apply with a creditworthy co-signer if they may have difficulty qualifying for a loan due to limited income and credit history. This may increase an applicant’s chances of approval and of possibly obtaining a better interest rate.
How to find a private student lender?
After you have exhausted all the federal loan opportunities, you may want to explore your options with a private lender. Places/Sources for a private loan:
- Check at your local bank to see if they offer a private educational loan
- Ask a friend or family member if they recommend a private lending institution that provides educational loans
- Search the Internet using words like “private student loan”, “private education loan”, “alternative student loan”
Items to compare when searching for a private lender:
- Interest rates and fees
- Repayment options
- Required payments while in school
- Credit rating requirement
- Customer service