Beginners ultimate guide to applying for student loans
Most students apply for education loans for studying abroad in order to fund their college education. However, there is a lot of confusion about applying for student loans, and the process to do so.
Accumulating the resources and funds to study abroad is a difficult task. While some students opt for funding their education with their family’s aid, most students decide to apply for a student loan. Student loans provide you with a way of paying up these fees for tuition so that you don’t spend crucial years waiting to gather it all. So, if you are one of those who do, how do you go about applying for student loans? In this blog, I’ve done my best to tell you all about that and more.
How much debt is too much?
Some of the commonly asked questions are: Is the student loan repayment worth it? and Do I really need to take that risk in my life? In my opinion, the fear of not being able to pay up only arises if you take on too much on your plate. Taking on a huge debt for studying at a college that doesn’t provide a good Return on Investment, is inadvisable. So how much debt is reasonable? Generally, counselors recommend that the maximum amount of student loan for studying abroad that should be considered is equal to no more than their anticipated starting salary. Ideally, you should try to keep your total student loan to no more than half of your first year’s starting salary.
If you think your starting salary will be approximately $40,000, then you should try not to exceed $10,000 per year in student loan debt for a 4-year degree.
For Public schools:
- Avg. tuition fees: $10,000 per annum
- Boarding and supplies: $11,200
For Private schools:
- Avg. tuition fees: $31,000 per annum
- Boarding and supplies: $12,500
How do you control your debt?
Well lucky for you, most colleges help deserving students by providing financial aid in different ways. All you have to do make them believe you need them the most. The different types of financial aid provided are:
- Scholarships: Scholarships waive off a part of the fee needed to pay based on parameters such as the student’s merit, sports skill, etc.(Some colleges also provide full scholarships).
- Grants: Grants are provided in a similar manner to that of scholarships and are provided to students in need.
- Loans: Certain colleges collaborate with organizations that provide loans at a lower rate of interest to facilitate easier admissions for students.
Your aim must be to get these grants or scholarships in order to reduce the total amount of your student loan. You don’t need to be a merit student in order to receive a scholarship or a grant. What you do need, is one powerful SOP (Statement of Purpose) to get you that much-needed discount. If you need help writing the perfect SOP, you can always log in to iSchoolConnect and check out our Essay/SOP analyzer.
Your ultimate student loan guide:
Now that you know how to minimize your student loan, you need to move on to applying for student loans. To help you along, we’ve created a series of steps to help you with precisely that:
Step 1: Applying to FAFSA
FAFSA or the Federal Application of Federal Student Aid is a government organization in the U.S that selects students based on their financial status and provides them with grants and scholarships from the government. While FAFSA generally provides these grants and scholarships to their citizens only, there are many universities in the U.S that use their analysis to determine the financial status of the student applying. So this may help you get scholarships and grants from the college directly.
Fill out an application with them. The application dates generally range from January 1st to June 30th. The FAFSA asks questions to determine the student’s level of financial need and establishes the amount of money the student or their parents are expected to pay out of pocket for the student’s college expenses.
Step 2: Contacting the Financial Aid Departments of Universities
Connect with the Financial Aid Departments of the various universities that you’ve gotten into and inquire about the various aids they offer. A general rule of thumb is to complete your scholarship applications a year prior to which you plan on getting enrolled. This is because most colleges decide to give their grants and scholarships early on, making it much tougher to get them afterward.
Step 3: Estimate of the amount of student loan for studying abroad required
The pointers that you must take care of whilst calculating the funding required to study abroad to determine the amount of student loan debt that you’ll need to take on are listed below:
- Make a calculated analysis of all the assets which can be used to dissolve/liquify/sell to compensate for the expenses.
- Calculate the actual student loan value by comparing interest rates commonly known as APR (Annual Percentage Rate).
- Or you could consult with an education loan expert or a study abroad education counsellor. Why don’t you speak to our counsellor to get an estimate? Your first session will be free of charge. Just log onto iSchoolConnect and book a slot with us.
Once you do this, you finally have an estimate as to how much it is going to cost you. Now let’s see how you go about applying for student loans.
Step 4: Creating a Study Loan Application:
Before applying for student loans, you must know the different types of loans that you can get. Broadly, education loan for studying abroad can be divided into two types:
- Unsecured Student Loans: The loan doesn’t need to be protected by a guarantee and no collateral is needed to be put on the loan.
- Secured Student Loans: The loans that do require collateral to be submitted against the loan taken.
Now that you’ve figured out a list of colleges that you want to apply to and you’ve spoken with their respective Financial Aid departments, you must do the following to make sure you’re are eligible for the student loans:-
- Check if the selected university/college/institution is on the bank list of colleges it provides education loans for studying abroad.
- If it’s not, don’t worry the student loan will still be processed (at a higher interest rate) if your application is credit-worthy.
- Check the list of permitted courses from the banking institutions list to find your prospect course there.
- Get a letter of acceptance (conditional admission offer) from your institution’s admission office.
- Check the value of your assets that you are willing to put as collateral and the required documents for their validation as requested by the bank.
Once you do this, you’ve finally got the necessary information and the education loan eligibility settled. All that’s left is to go to your selected banks and follow the procedure to apply for a student loan.
Step 5: Study Loan Application and Finalisation.
The application process for getting a study loan to study abroad is mentioned below:-
- Statement of Student Loan application:
You must submit all the related documents such as your application form, related personal documents, and your financial and academic documents.
- Approval of Loan:
The approval of the loan takes place based on your credit history, post-qualification repayment capacity, collateral strength, and bank policies. This process generally takes 2-7 days.
- Negotiation of Interest Rate and Additional Charges:
This is where your sales skills are put to the test. You can negotiate with the bank for the reduction/discount on the interest rate. You can mark-up charges like ‘Origination fees’, ‘Processing Fees’, ‘Forex Charges’, ‘Deed Writing Charges’, etc.
- Confirmation and issue of Loan Conditional Offer:
Finally, you’ve got your loan. You can present this to the immigration and visa offices as proof of funds. This also acts as an unconditional offer of admission for academic institutions.
Once your student loan has been approved, you’re free to pursue your study abroad dreams and fly overseas.
All these steps of getting a Student loan for studying abroad may seem daunting right now but trust me, studying abroad on a tight budget is possible. All it requires is a little perseverance and I’m sure you’ll be flying abroad closer to your dreams, in no time. For help with any questions regarding studying abroad, please feel free to contact us at iSchoolConnect. Happy studying!