Obtaining a higher education can be terribly expensive and in order to cover this initial cost in hopes that it will improve your future income, many American students take out student loans. These funds go directly to the school which she uses to pay tuition and all school-related costs first.
Any excess money will be returned to the borrower as reimbursement can be used to cover other expenses, including rent. Ideally, however, you want to incur as little debt as possible while you graduate, which means you will need to budget wisely for the use of the money that has been loaned to you.
How is the amount of your student loan determined?
When you apply for federal student financial aid, your institution’s financial aid office will determine the amount of financial aid you are eligible for. Eligibility to receive a federal student loan “depends on your expected family contribution, your year in school, your enrollment status, and the cost of attending the school you will attend.” according to the Ministry of Education.
The financial aid staff will use a formula to calculate the amount of need-based aid you may receive. This is determined by looking at the cost of attending school and then subtracting your expected family contribution.
The amount of financial assistance that those who apply for assistance but do not need it can receive is determined using the cost of participation less any financial aid already given, which includes aid from all sources, such as need-based aid and private scholarships, among others.
What expenses can funds from student loans be used to pay?
When determining the cost of participation, financial aid staff consider several factors, including tuition and fees, books, supplies, equipment, transportation, and miscellaneous personal expenses, as well as room and board in on-campus school accommodation or rent for off-campus accommodation. Additionally, other factors such as special needs disability, child care or other dependent care costs are included. Even “reasonable costs for eligible study abroad programs” are considered.
Federal student loans are decided for the entire academic year and must be renewed each year. The sooner you know where you are going to live will help you determine how much money you will need to cover your school attendance costs.
Once you have obtained a federal student loan, you should know that the funds are disbursed in at least two periodic packages. You will need to calculate your monthly budget to avoid needing additional financial assistance through private loans which may have higher interest rates and do not provide most of the benefits of federal loans.
How to Apply for a Federal Student Loan
In order to get the ball rolling, you will need to complete the Free Application for Federal Student Aid (FAFSA) form as soon as possible during the previous academic year. When you have committed to attending college, you will want to submit your FAFSA as soon as possible to allow the federal government to review your case. FAFSA forms are available on October 1 each year and you will need to submit them by your state’s deadline.
In addition to calculating the school’s financial aid staff, the Ministry of Education will need to know your parents’ economic situation and your status as a dependent. If you need help filling out the form, the government’s Federal Student Aid website provides a guide.