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How to Score a Loan for College

How to Score a Loan for College

Anne Tergesen / BusinessWeek

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The first step is to fill out the paperwork. Start with the Free Application for Federal Student Aid (FAFSA) at fafsa.ed.gov. Even those who don’t qualify for aid should fill it out, since FAFSA is a requirement for government-backed loans. In addition, you’ll have to complete an application for each loan for which you apply.

Most Stafford and PLUS loans feature at least one of three types of discounts: fee waivers, principal reductions, and interest-rate reductions. To crunch the numbers, use the calculator at FinAid (finaid.org/calculators/loandiscountanalyzer.phtml). It factors in the effect of fee reductions and other discounts and comes up with a “discounted interest rate.”

As a rule, favor discounts that kick in early in the life of a loan and cannot be canceled. Discounts contingent on good behavior—such as paying on time for the first 48 months—are less valuable. Fewer than 10% of borrowers ever qualify.


Poll: How do you feel about crying at work?

Poll: How do you feel about crying at work?