December 06, 2001
By: Bev Dodd
Education loan: Great service from people who care
Be sure to borrow only what you need for a education loan. It's wise to access the level of service you may expect to receive from your education loan lender. We'll discuss this more below.
Remember, you will have to pay back all the money you borrow for your education loan, so be sure to borrow only what you need. You don't have to borrow the full amount of any loans included in your financial aid package. If you can make do by borrowing less, request a reduction in your loan amount. Avoid using high-interest loans and credit cards to pay your school bills.
Usually our first question is do we qualify for an education loan? It depends on your financial circumstances and on the cost of the college. One of the basic premises of financial aid is that the family is expected to contribute to college costs to the extent the family is able. If that amount can't cover the cost, financial aid can help make up the difference. This concept is frequently referred to as the Expected Family Contribution or EFC for short.
The Federal Family Education Loan Program includes Stafford and PLUS (parent) loans. Although the federal government has specified the major provisions of these loans, such as how much you are permitted to borrow and what your interest rate will be, there are differences in how lenders treat their clients with respect to the processing of the education loan. It is wise to assess the level of service you may expect to receive from your lender before committing yourself to borrow from them--- find out how your lender plans to manage your education loan portfolio for the duration of the time you are in school.
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