What costs can federal student loans cover? Fortunately, since we know college costs go beyond classes, student loans can cover more than just tuition. They are intended to cover the cost of attendance (COA), which is determined by each college, and includes tuition, fees, room and board, books, supplies, and other related expenses like the technology needed to complete your program.
There are a variety of federal loans available to you based on your situation:
- If you’re an undergraduate student, you can qualify for the Direct Subsidized or Unsubsidized loan, also called the Stafford Loan. The Direct Subsidized Loan requires you demonstrate financial need, while the Unsubsidized Loan does not. If you’re a graduate student, the Unsubsidized Loan is your only option for Stafford Loans.
- Are you a parent of an undergraduate student? You may qualify for Parent Plus loan. This loan does require a credit check. If a parent doesn’t meet credit requirements, the parent can still borrow this type of loan if they submit a successful appeal, or apply with a creditworthy cosigner.
You may have also heard about Perkins Loans, low-interest federal loans for students with exceptional financial need. As of June 30, 2018, under federal law, these loans are no longer originated or disbursed, meaning new Perkins loans are no longer available.
Private loans for college
In addition to federal student loans, there are also private student loans. These loans, originated and disbursed by banks and credit unions, will typically offer flexibility in terms or how much you can borrow and your interest rates. That said, requirements are more stringent when it comes to these loans, because private lenders require you prove to be a creditworthy applicant. This means you (and usually your cosigner, if you’re a young adult with little credit history) will have to complete a credit check before you can borrow in order to prove your willingness and ability to repay.
There are private student loans for undergraduates, graduate students, students pursuing certificates, dental, medical, and health professions students, and even loans for grad students who are studying for the bar exam or relocating for medical or dental residencies. In addition to the loans taken out by students, some private student loans can be taken out by parents, too.
Private student loans, like federal, can be used for tuition, room and board, books and supplies, technology, etc.
Loans for graduate or professional school
According to a recent study on how graduate students pay for college, more than 75% of graduate students borrow federal and/or private loans to help pay for school expenses. Graduate students or those pursuing medical, dental, or law school will have even more options for borrowing.
Federal loans include direct unsubsidized loans. Eligible students can borrow up to $20,500 per year. You apply for these loans by filling out the FAFSA.
There are also private student loans which can be tailored to meet the unique needs of graduate and professional students. A medical school student, for example, may have different needs than a student pursuing her MBA. Grad students can borrow Direct PLUS loans, which can cover the complete cost of attendance, minus any other financial aid.
College loan eligibility
Eligibility for student loans depends on what type of loan you’re seeking. Looking for a federal loan? The college loan requirements are as follows:
- Be a U.S. citizen, national, or eligible non-citizen
- Be enrolled at least half-time in an eligible degree or certificate-granting program
- Have received a high school diploma or equivalent (like the GED)
- Not in default on any existing federal student loans
- Meet general eligibility requirements for federal student aid
If you’re a parent looking to secure a federal Parent PLUS loan, you have the additional credit requirement, so students and parents can’t be in default on an outstanding federal student loan.
Like mentioned before, if you’re looking for a private student loan, you have to meet the lender’s specific credit requirements. Most of the time, undergrads will be required to have a creditworthy cosigner in order to back the loan.
- If you’re planning on borrowing for college, you have a lot of options when it comes to student loans. Federal, private, student, parent, and loans tailored for your degree – be sure to shop around and choose the loan that suits you best.
- Not sure if you’re eligible? Federal loans have fewer requirements when it comes to qualifying for a loan. If you are a creditworthy borrower, though, private student loans may have more attractive interest rates.
- Comparing loans can be more complicated than it sounds. Be sure to have your offered interest rate, loan term, repayment options, and possible fees lined up before you choose which is right for you.