Applying for colleges and student loans can be an overwhelming experience. And if you’re a first-generation college student, the process can be more daunting because of the inability of a parent to show you the ropes of college applications and student loan requirements.
Here are a few things first-generation students should know about student loans and how to get money to pay for school.
Find out your family’s Expected Family Contribution (EFC)
Your EFC is calculated when you submit your Free Application for Federal Student Aid (FAFSA). The FAFSA is your ticket to federal financial aid, which can help cover some or all of the costs of college minus your EFC, which your family is expected to pay. The earlier you apply, the sooner you’ll know the amount you’ll need for college.
Anna Ren, an independent education consultant and founder of Elite Advantage Prep, said you can figure out your EFC online.
“Take advantage of [using] EFC calculators that are available on every school’s financial aid website,” Ren said. “That way, [you] can get a realistic idea of what that school will cost.”
Ren, who was the first in her family to graduate from college, said you should avoid settling for local schools just because you might think they cost less. Look for other options, too.
“Students that come from low-income families should try to apply for schools that meet 100% of financial need or as close to that as possible,” she said. “As a high school student, I thought my local state school would be the most affordable option, but they actually didn’t offer me anything but loans, whereas Georgetown offered me the most aid in the form of grants.”
Get federal student loans
Federal loans are your best option to borrow money for school. They tend to have lower interest rates and flexible repayment options after you graduate. Direct Subsidized Loans will show up in your FAFSA award letter and are based on financial need. Direct Unsubsidized Loans also are available, but they aren’t based on need. Parent PLUS Loans are available for parents to take out on their child’s behalf.
Repayment options are more lenient on federal student loans than private borrowing. For example, you might qualify for income-driven repayment plans that can lower monthly payments when it’s time to starting paying back your loan.
Consider private student loans
If you need help beyond federal loans to pay for school, you could consider private student loans. They’re issued by banks, credit unions, and private companies rather than by the federal government, and tend to have higher interest rates.
Because the eligibility requirements are more stringent for private loans, you might need a cosigner to get approved. In that case, a cosigner agrees to repay your loan if you don’t. Sometimes, you could get a lower interest rate than the one charged by federal loans if your cosigner’s credit is strong. Evaluate your options and be sure to read through each lender’s terms and interest rates before finding the best private loan for your situation.
Apply for grants and scholarships
After you complete the FAFSA, your award letter will tell you how much money you’ll receive from federal and state grants and scholarships.
Grants and scholarships are essentially free money you won’t have to repay, unlike student loans. Grants are based on need and are great for anyone who doesn’t have the family resources to help pay for school. You also can try for scholarships, which usually are based on academic or athletic merit, so look for all the ones you think you’d be eligible for.
You also can apply for first-generation scholarships. Even winning one or two can help lessen the amount of student debt you’ll need to take out.
Getting money as a first-generation college student
If you’re the first in your family to go to college, it can be overwhelming for you and your family. As long as you start planning early and exhaust all your options, you should be able to afford college.
Do your best to get as much free money as possible through grants and scholarships, and then tap into student loans to help pay for the rest.
Need a student loan?Here are our top student loan lenders of 2019!
|2 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1)All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with an 8-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7% variable Annual Percentage Rate (“APR”): 96 monthly payments of $179.28 while in the repayment period, for a total amount of payments of $17,211.20. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 5/29/2019. Variable interest rates may increase after consummation.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
4 Important Disclosures for Discover.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
* Offer valid for new Custom Choice Loans for which applications are submitted for a credit decision between 12:00:00am EST on June 1, 2019 and 11:59:59pm EST on August 31, 2019. A 0.50% interest rate reduction will be included in the loan options presented to an applicant during the online application process, upon passing the initial credit review. The interest rate reduction will be applied as of the first disbursement date and will be effective for the life of the loan.
6 Important Disclosures for LendKey.
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.99% – 11.98%2||Undergraduate, Graduate, and Parents|
|4.50% – 11.35%*,3||Undergraduate and Graduate|
|4.84% – 11.99%4||Undergraduate and Graduate|
|3.27% – 10.80%5||Undergraduate and Graduate|
|4.46% – 9.43%6||Undergraduate and Graduate|
|3.74% – 9.72%7||Undergraduate, Graduate, and Parents|
|3.99% – 11.64%8||Undergraduate, Graduate, and Parents|