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How to go about getting loans

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Wrigley2172
Frequent Contributor

How to go about getting loans

Hi all and a happy late mom's day to moms of MyFico!

 

So after getting 90 of my 120 credits for my BS at my local community college, the time has come for me to transfer to a 4 year institution. I will need to take out a loan for ~21k. I am currently filling out my FAFSA documents in hopes of getting a fixed interest federal loan as I am unlikely to receive any free money with my dad being a business owner. If I don't recieve a federal loan "not sure if that is even a thing" how do I go about shopping for the loan? I'm not really sure how the whole student loan process works. Any and all help is much appreciated. My personal DP's are as follows:

22 year old college student

12k income

Discover chrome 4k line

all FICO8 scores ~ 810 as of may 18th

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>>23k student loan-payed off
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Message 1 of 4
3 REPLIES 3
Anonymous
Not applicable

Re: How to go about getting loans

Contrasts on your upcoming transfer to a University! You're halfway there.

Yes, the FAFSA will award you any federal aid you qualify for: work study, grants, loans, etc.
The fixed rate part isn't so important; they can always be consolidated later. The main factor right now is whether they will see your as independent or dependent. You mentioned your father's income; I'm guessing you are looked at as dependent. Your father will likely be offered the parent PLUS federal loan. I recommend against these because once done, it cannot be covered to a student federal loan. There are numerous benefits to student loans such as deferments and forbearances, or payments based on your income. I would recommend you two do some research before you make the final decision to accept it or not.
I believe there are two more options. If you are not offered a PLUS loan, you will be offered student loans to make up for it (unsubsidized I think). Or if you don't want to put their information on the application because they afternoon going to help you, you'll get Unsubsidized loans only. There is an annual limit for both subsidized and unsubsidized loans. I'm really rusty on those details but here's the links with all of the details:

https://studentaid.ed.gov/sa/fafsa/filling-out/dependency

https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized


The last result would be to take out a private loan. I wouldn't see it as either or; try to accept any federal aid before this. There are very few protections and the payments don't really take into account your income. Interest accrues immediately.
If you have any more questions feel free to ask. It's a big decision and we'd like to help give you any information you need to make it. Student Loan Hero website also had an abundance of articles that talk about these things.
Message 2 of 4
Wrigley2172
Frequent Contributor

Re: How to go about getting loans

I appreciate the response. If you remember correctly could I receive the needed amount in one loan? I only have 1 year left as my transfer school and community college have a 3+1 agreement hence the 90 out of 120 credits completed at my CC. You mentioned consolidation however I would love to just take out one loan for the aprox 21k I need. Along with that what models do student loans use? Is my credit sufficent to not need a parent "likely dad" to co-sign? I will check out the links you provided thank you very much.
Affinity Cash Rewards: 15,000
Amex BCP: 30,000
Amex Platinum
BCU Cash Rewards: 18,000
Discover it: 14,700
TJX Mastercard: 2,500
Venmo: 10,000
>>23k student loan-payed off
Ficos 8's ~790
Inq: EX:1 EQ:1 TU:1
Message 3 of 4
Anonymous
Not applicable

Re: How to go about getting loans

Oh that's great! You're almost done.
The loans most people get, you'll receive one loan per semester. That's why in the threads you'll see people talking about having 8 tradelines/ loans. That's the student loan. The Parent loan might be all one loan, I don't recall. I can ask someone I know who got one, but it might not be how is fine now. There are some recent threads with people who took them out asking for advice so you could always ask them.
I mentioned consolidation in case you get multiple student loans (I don't recommend it for this reason) and/ or if you get a variable interest rate. Most of the federal loans for school I've heard of in recent years were fixed though.
Having multiple tradelines will likely help you. You're probably young; these will likely end up being some of the oldest tradelines on your credit report for a long while. My average age of accounts barely budged when I turn in a credit application because I have all those old tradelines from my student loans. It will also increase your positive payments. You have a great credit score right now but that's not uncommon for a young person if you don't have much on there. These loans will help you maintain that score.
Additionally you'll see there are limitations on how much you can borrow per year, depending on your year in school. You should be eligible for the max, but I'm not sure if that goes up to $21k (see looks). Even though you want only one loan, I would recommend accepting what you can get from federal aid then make up the rest with a small private loan if needed. Many people are tempted by private loans because of the potentially lower APR, but you really have to ask yourself if it's worth the risk of losing a job or being in a financial crunch in the future and needing to make lower payments. Federal loans are very flexible; I've seen a lot of people regret the lack of options for private loans.
You should be able to get the unsubsidized student loans if you don't provide your parent information. Read up on the links to make sure, I don't want to guide you wrong. You'll just qualify based on you need. I had a job in HS and still got the max so I wouldn't worry. If you go for the PLUS loan, unlike the student loan, he'll have to qualify based on his credit. If he is not approved, you then be offered the student unsubsidized loans.
Don't hesitate to contact the Financial Aid department of your soon-University. They can probably help a lot.
Great questions, btw.
Message 4 of 4
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