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2. Apply for Financial Aid

Student Loans

The financial aid offer you receive from a college or university will outline the types of financial aid for which you have qualified, including student loans. The application and acceptance process may vary depending on the type of loan you're seeking and the school you choose to attend.

Information from your FAFSA will be used to determine your eligibility for student loans, and you may see loans listed in your financial aid offer. However, you're not obligated to accept loans just because they offer them to you. You'll be required to complete additional paperwork with your college or university to accept federal student loans.

For more information on applying for student loans, check out the U.S. Department of Education's Federal Student Aid website.

Borrow Smart From the Start

Borrow Smart

A student loan is a serious obligation. It must be repaid whether you complete your education or withdraw before graduation. No matter which loans you decide to accept, be a wise borrower and only borrow what you need to pay your educational expenses each year. You can set yourself up for student loan success by making smart borrowing choices from the start. To view a complete list of ways to 'borrow smart', download our Borrow Smart From the Start brochure. This guide is also available in Spanish.

Student Loan Language

Subsidized Student Loans

Loans offered to eligible students by the U.S. Department of Education. To qualify, students must be enrolled in an eligible degree or certificate program at least half-time. The U.S. Department of Education pays the interest on a Direct Subsidized Loan while you're in school at least half-time, for the first six months after you leave school (referred to as a grace period), and during a period of deferment (a postponement of loan payments).

Unsubsidized Student Loans

Loans offered to eligible students by the U.S. Department of Education. To qualify, students must be enrolled in an eligible degree or certificate program at least half-time. If you choose not to pay the interest while you are in school and during grace periods and deferment or forbearance periods, your interest will accrue (accumulate) and be capitalized (that is, your interest will be added to the principal amount of your loan).

Master Promissory Note

If you are taking out a subsidized or unsubsidized Federal Direct Loan, you must complete the Master Promissory Note (MPN) before your funds can be disbursed. The MPN is your promise to repay and is a legally-binding document.

Entrance Counseling

If you are taking out a federal loan, your college will ask you to complete entrance counseling. Depending on the procedures at your college or university, you may be able to complete it online, or in a group or individual meeting. The entrance interview explains your rights and responsibilities and the terms and conditions of your loan. It is a good time to ask questions regarding your student loans.

Exit Counseling

If you borrow a subsidized, unsubsidized or PLUS loan under the Direct Loan Program, you must complete exit counseling before you graduate, drop below half-time attendance or leave school.

Depending on the procedures at your college or university, you may be able to complete it online, or in a group or individual meeting. The exit interview concentrates on your repayment obligations and options, and stresses the consequences of default. For more information on repaying your student loans, visit the U.S. Department of Education's Federal Student Aid website.

PLUS Application/Promissory Note

If your parent chooses to take out a PLUS loan to help you pay for school, they will complete a separate Master Promissory Note (MPN). It is called a Direct PLUS Loan Master Promissory Note. You must be a dependent, undergraduate student for your parent to take out a PLUS loan on your behalf. Contact your college for more information on the specifics.

Private Education Loan

Private education loans are loans from banks or other lending institutions that are not federally supported or guaranteed. They are also referred to as alternative loans. Private loans may be more difficult to qualify for because they can require a credit check to determine your ability to repay the loan. Since federal loans generally offer better terms and repayment flexibility, it is wise to explore your eligibility for federal loans prior to considering an alternative loan. If you have general questions about alternative loans, contact your financial aid office.

 

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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.