Federal Direct Loan Program
The U.S. Department of Education offers low-interest loans to eligible students to help cover the cost of college through the Direct Loan Program. The FAFSA (Free Application for Federal Student Aid) is the annual application. Students must also complete entrance counseling and a Master Promissory Note (MPN) to receive loans. The most current information about federal student loans is at https://studentaid.gov and https://studentloans.gov.
Borrowers should track federal loan amounts, interest and payments with the federal loan servicer. Different federal loans may have different servicers. If you currently have federal student loans and want to know the servicer of your loans, use the free loan locator service of the National Student Loan Data System.
Private Student Loan Program
Private loans are typically from banks or state agencies, not part of the federal Direct Loan Program. These loans have different eligibility requirements and loan terms (repayment, interest rate, etc.). Before considering applying for a private loan, follow the steps below.
First, always seek free aid such as scholarships, grants, employer tuition reimbursement, or any other funds you do not have to repay.
Second, use funds earned from work to pay some or all of the cost of attendance.
Third, consider federal student loans with interest rate caps, generous repayment terms and various repayment options. However, Direct PLUS loans may have higher interest than some private loans.
Finally, if you must apply for private education loan consider two or more options, including loan programs offered by state agencies that may also have reduced interest rates and generous repayment terms.
How Do I Apply?
Complete a private loan application on the lender’s web site. When applying, use dates for which you will attend and need the loan funds. For dates, view the Academic Calendar section in the APU Catalog (see the link at the top of the page). Here are several questions to consider:
- Is there an income requirement?
- Is there a credit score requirement?
- What are the interest rates?
- Is the interest rate fixed or variable?
- What is the basis of a variable interest rate?
- How often will the interest rates change?
- Is a co-signer required?
- Is there a co-signer release option?
- Is there a lower interest rate with a co-signer?
- Are there any loan origination fees?
- Are there any pre-payment fees?
- Are there late payment fees?
- How are my payments applied to my balance?
- Can I defer payments while in school?
- When will repayment begin?
- How much will my payments be?
- What are the repayment options?
An approved loan application requires the borrower to complete lender requirements and the school to certify student eligibility. Borrowers should actively communicate with the lender and the school to ensure the process is complete for each loan.