Guaranteed Student Loans

Guaranteed Student Loans

I was discussing student loans with a friend the other day when they mentioned a guaranteed student loan. We didn’t have time to get into it at the time, but I was intrigued – who was guaranteeing what?

An hour or 2 of research later, and it appears that Guaranteed student loan is really just another term for a subsidized Stafford loan – the kind we talk about in this article about Federal Student Loan Payback. The short explanation is this: Subsidized Stafford loans are backed with money from approved private institutions, and as long as you are in school, the Government pays that institution interest on your loan amount as well as the fees associated with managing a loan. Sounds like a good deal to me.

What types of Financial Aid Exist?

Financial aid comes in a few different flavors.  Ill discuss them in depth in later posts, but here are the basics:

• Scholarships
  • Scholarships are usually granted based on merit – academic, athletic, or otherwise.  They are given by the school or another organization.
• Student Loans
  • Student loans are given by the government directly to the student – they are appealing because they have low interest rates, and do not require credit checks.
• Parent Loans
  • Parent loans are given to parents of students to help cover the costs of college.  They can be given by the government, as well as private lenders.
• Private Student Loans
  • Private student loans are granted from banks and other institutions to students.  These loans generally have higher interest rates than federally backed student loans, and are granted based on criteria like credit score and history.

What determines how much financial aid I will get?

The amount of aid a potential student receives is determined by a number of factors – But to give you an idea, here are the main ones:

• Expected Family Contribution:
  • Your Expected Family Contribution weighs heavily on how much aid your eceive for school – and with good reason:  the more money your family is able to give, the less money the government needs to give you.  The extra money can be used for those who’s families are less able to contribute.
• Your year in School:
  • Generally, the longer you’ve been in school, the less financial aid you’ll receive.
• Your enrollment status:
  • Part time students receive far less aid than those enrolled in at least 12 credit hours.  To ensure that you get the maximum amount of aid, enroll as a full time student.
• The cost of attendance at your school
  • Logically, the more tuition is at your school, the more help you’ll need from the government.  As such, students at more expensive schools receive more money.

Am I eligible for federal student aid?

Most people will find that they are eligible for federal student aid – but just to be sure, here are the requirements (according to the FAFSA website):

• Be a U.S. citizen (or an eligible non-citizen)
• Have a valid Social Security Number
• Register with Selective Service
• Possess a high school diploma or GED
• Be currently enrolled (or accepted) as a student working towards a degree in an eligible school
• Not owe a refund on a federal grant or be in default on a student loan
• Have qualifying financial need

So, to wrap up, to be eligible for Federal Student Aid, you need to be a student who has graduated from high school, (or received a GED), be accepted/enrolled in an accredited and eligible program in an eligible school, have all their current federal loans up to date and in order, and need the money (according to their standards). Good Luck!

How do I apply for aid with the FAFSA?

Applying for aid with the Federal Application For Student Aid is actually pretty simple, especially if you do it online. The official FAFSA website outlines the main steps for doing so – Ill paraphrase them here:

1. Complete the FAFSA online (it can be found by clicking here) and provide the signatures required.
2. Wait for the FAFSA to be processed. Once it is, you’ll receive a Student Aid Report. On the FAFSA website, they’ll refer to this as your SAR.
3. Check out the Student Aid Report for accuracy. This is important – clerical errors happen all the time, and can be a huge hassle to clean up later on!
4. Keep a printed copy of your Student Aid Report – Again, this is important. Keeping good records of everything related to your student loans will save you time and effort later on.
5. An Expected Family Contribution should be printed at the top right of the page. (What is EFC?) Your school will use this number to award your financial aid.

Just like that, you’re done! Find more information on the official FAFSA website.