You may not think about it while you are using them, but Federal Student Aid (FSA) loans have a four-part life cycle. All of these parts are important to think about. These four parts are as follows:
- Planning how to pay for school
- Being packaged for, and having loans originated and awarded
- Grace and repayment
It will be beneficial to you if you think about your loans from before you even receive them to after you have completed your schooling. All four parts will be explored in further depth.
One of the major things you need to think about when choosing which school you want to attend is how you are going to cover your cost of attendance (COA). Loans are a great resource to use, but irresponsible or ignorant behavior can cause you to have major financial issues in the future. Research what kinds of loans are best for you. You should also create a budget to see the minimum amount of loans you need to take out. After you have made your decisions, you will be packaged and awarded based on the information from your Free Application for Federal Student Aid (FAFSA). Your school’s financial aid office will decide how much aid you are eligible for, and you will be able to accept aid up to that amount. After doing so, the Department of Education will disburse funds to your school, and anything left over after covering the COA will be disbursed to you in the form of a credit balance.
While you are in school, you will want to maintain at least half-time enrollment in order to keep your loans in an in-school status. As long as you are in an in-school status, your loans will not come due (please keep in mind that interest will accumulate). After you complete school, you will have one six-month grace period, but after that grace period expires, your first payment will come due. Just because you complete school does not mean that your loans disappear. During exit loan counseling, you will need to set up a repayment plan with your loan servicer. There are many options to choose from, so use as many resources as possible to come up with the right selection for you. The quicker you are able to pay off your loans, the less interest will accrue on them. If you take time to understand the whole life of your loans, you should benefit financially.
By Ryan Laspina
Senior Specialist, Red Flags and External Reviews at APUS