Loan Link

What is a loan?

A loan provides all the money requested in one go at the time it is issued in the case of a credit. The bank provides the customer with an amount of money, which can be used as the entire amount borrowed, part of it, or none at all.

Loans allow for growth in the overall money supply in an economy and open up competition by lending to new businesses. The interest and fees from loans are a primary source of revenue for many banks as well as some retailers through the use of credit facilities and credit cards.

What are student loans?

Student loans are money borrowed from a bank, government, or school that must be paid back later with interest. Student loans help pay off expenses students encounter during their college education.

There are 2 types of student loans, federal and private. Federal loans are more common, offer income-based repayments, and are the same for everyone. Private lenders don't have benefits like income-based repayments. Depending on the lender, they have their own loan terms, interest rates, and fees.

Types of federal student loans:

• Direct Subsidized

  • For Undergraduate Students

  • Dependent on the financial situation, school decides how much you get

  • Usually less than Direct Subsidized

  • 5.5% APR*

  • Does not accrue interest while you are in school at least half-time, for the first 6 months after graduation, or during a period of deferment

• Direct Unsubsidized

  • For Undergraduate/Graduate/Professional Students

  • Not dependent on the financial situation, school decides amount based on cost of attendance and other financial aid

  • 5.5% APR* for Undergraduate, 7.05% APR* for Graduate/Professional Students

  • Accrues interest immediately after disbursement of loan until it’s paid in full

• Direct PLUS

  • For graduate/professional/parents of dependent undergraduate students

  • Require credit check/Not dependent on the financial situation

  • 7.05% APR*

• Direct Consolidation

  • Combines all federal student loans into one

  • Only for Graduate students

  • 8.25% APR*

Types of private student loans:

• College Ave Student Loans

  • 4.44% APR

  • Covers 100% of attendance costs

  • Can pay immediately or after degree completion

• Sally Mae Student Loans

  • 4.5% APR

  • Covers 100% of school-certified expenses

  • Can pay immediately or after degree completion

*APR - Annual Percentage Rate, otherwise known as interest. Interest is additional money that you pay to a lender as a cost of borrowing money.

What are the qualifications for a federal student loan?

• U.S citizen or eligible noncitizen

• have financial need

• have a social security number

• be enrolled in an eligible degree in college or career school

• maintain a satisfactory academic process

• have a cosigner who is an adult with a good credit score that can help you take part of the responsibility for the loan.

What happens if you do not pay off your student loans?

• Interest may accumulate, causing you to owe more over time.

• Interest rates may increase, making interest accumulation worse.

• Loans may go into default, allowing lenders hire debt collectors to take property as payment.

• Benefits from your loans may be lost.

• Your credit score may lower, making it hard or impossible to buy or sell assets.

If you meet the requirements or if the loan has gone on for long enough, your lender may forgive some or all of your student loan debts.

How do I apply for a federal student loan?

• Complete the FASFA form to apply for financial aid at https://studentaid.gov/h/apply-for-aid/fafsa

• Based on the results of your application, your school will send you a financial aid offer and will help you accept all or part of the loan

• Before receiving the loan, you must complete entrance counseling, which helps you understand the loan’s terms, and sign a Master Promissory Note, agreeing to the loan’s terms.

How do I apply for a private student loan?

• Complete an application on the private lender’s website after you have made your school decision and once you know how much you need

• After submitting your loan application, you will normally get a credit decision within 15 minutes.

• Once approved, you will also get notices to review, accept, and sign your loan terms.

 Nearly 8/10 students who graduate have less than $30,000 in debt. The reason why so many college students have debt is because the college’s tuition is becoming more and more expensive which means their income can’t keep up which leads to them getting loans and being in debt. Average student loans debt is about $37,163 in the state of California.

Americans currently owe over $1.6 trillion on their student loans. That was the cumulative student loan balance among American consumers as of February, 2020. A decade ago, the figure was less than half as much: $695 billion. Student loans are now the largest form of consumer debt in the U.S. other than mortgage exceeding car loans and credit card debt.