The FAQs call center representatives answer every day— and the answers that you should know before you call.
“Hi, thank you for calling Student Lending. This is Talia. How can I help you today?”
Summer... what is supposed to be a time of leisure and relaxation, but for me, it is a full-time conversation about student loans. My official job title is “Student Lending Specialist,” so you know I’m actually qualified. I have worked on the supervising team and trained temporary employees. Paying for college can be stressful, but that is why all the agents, myself included, are there to help. What could I possibly want to be doing more on an 85-degree-perfect-beach-day? I’m kidding, I’m kidding. All jokes aside, talking to students and parents has taught me about the student loan process — which needs to be completed by you and only you.
I want to make sure that you have a basic understanding of the work that you need to complete and understand prior to calling in to a lending company. The company will be willing to help you understand these things as well, but if you do this background work in advance, it will save you time and allow you to ask specific questions, rather than sitting on the phone for hours talking about things you could have found online. Here are some FAQs I receive in the preliminary calls with students and parents.
I understand, you need to get this funding right now because your bill is due tomorrow, believe me, I do. Which is why we want to avoid this at all costs. You cannot (and I can’t stress this enough) get a loan in one day. There is too much that needs to happen. Since bills for the fall semester are typically released in May and due in August, this is the peak time to apply for loans, so I want to make sure you know before then that loans take time to process. Sitting on the phone talking to anxious parents and students has taught me a lot about just how many things that you need to prepare for when applying for a loan, and let me be the first to tell you, you need to start early.
In my experience, the best time to apply for a loan is between the beginning of May and the end of June, but not every school is so kind as to provide the needed information before this time period. If that’s the case for you, I’m sorry. You’re right, it isn’t fair that they have not sent it out, but as the person who is trying to help you secure funding, I cannot make your school release the bill. I really wish I could, but I can’t. Call them immediately to find out why you don’t have your bill, and what you should do to get it soon. Unfortunately, some schools just take a lot longer than others.
“Can someone call the school for me?”
No, and it is because of a little law called the Family Education Rights and Privacy Act (FERPA). Essentially, in short, FERPA prevents any school of higher education from releasing your private information, even to the people you are related to. This is because when you get to college, you are considered an adult with rights! But, this means that you are the person responsible for your own success. However, what I recommend is calling your school’s financial aid office before July. That way, if additional documentation is needed, you know well before the bill’s due date.
This office is going to expect to speak directly with you due to federal policy. I know, talking about how much you are going to owe your school is not how you want to spend your summer, but it is important. One year, I needed to request documents from the IRS for my financial aid office, and that one sheet of paper set the release of my financial aid packet back almost four weeks. Don’t do that. It messes up a lot of things and it is easily avoidable with a simple phone call to your financial aid office.
“I owe my school $20,000 for this upcoming school year. What do I do?”
Once you have the bill, and you know how much you need for the loan, where do you start? First, what is a loan? What does it mean to take one out? What is interest? All of these questions are valid and this video is helpful in learning loan basics!
First, decide what type of student loan you want to apply for. There are both Student Loans and Parent Loans, and the difference lies in who holds the debt. On a parent loan, the loan is solely in the parent’s name, and the student is listed as a benefactor. Also, when I say “parent,” it does not need to be a parent in a traditional sense. In short, this is someone who is willing to take on debt for you because they love you a whole lot, no matter what their physical relationship is to you. This could be a parent, grandparent, aunt, uncle, cousin, sister, a close friend, or anyone else that you can think of. The only caveat is that they must be eligible to take out a loan in your name, which means that they need to meet the minimum criteria to qualify for a loan. With a student loan, however, the student is the primary loan holder, but the debt is not solely in your name since the cosigner shares responsibility for the debt.
“Why do I need a cosigner? It’s not like I’m stealing money from the lending company or something.”
I know you don’t want a cosigner, but since this is a legally binding contract, most students need to have a cosigner. As the primary loan holder, you need to be above the age of majority (this just means that you are considered an adult in your state — most states are 18, but there are a few exceptions) and have sufficient credit history to apply for a private student loan without a cosigner. While loan companies vary, sufficient credit history is typically between three and five years. Most lending companies will look for between seven and ten years of credit history. They are looking for insurance that you are going to pay back the loan. If you are making regular monthly payments to a bill or other loan in your name then it can help with your credit history.
Credit is a daunting subject and not one that I’m an expert in, so your questions are probably best answered here, or by calling a credit bureau (Expirian, Transunion, or Equifax). Also, a side note: don’t trust sites like Credit Karma to give you an accurate reading. You are entitled to one free credit report each year, so take advantage of it. There will be variations between all of the bureaus, but it can give you a general idea of what your score is. From my experience, Equifax is typically the lowest of the three scores and is a favorite among lending companies.
“Well what if I can’t pay back my loans? I know they can get really expensive.”
A student loan is an unsecured loan. Unlike an auto loan, where the lending company can repossess the car if they don’t get paid back on time, there is no way to take your education back. If you don’t pay them back, they will continuously bring down your credit score, and the credit score of your cosigner. This will prevent you from taking out other loans, such as auto loans, mortgages, etc. until your student loans are paid off. I know, pretty serious stuff. Cosigners, in this case, are helpful because they sign a legal contract to say, “This person will make the payments or we are both going down,” hence why this is someone who loves you enough to be willing to go into debt for you, as I mentioned before.
“What is my interest rate going to be?”
Interest rates are confusing, but they are important to understand. As I mentioned earlier, the video on loan basics can help explain how interest works, so I suggest looking at it before signing any loan documents. Most lending companies won’t tell you what your interest rates would be until after you apply for the loan since rates are based on your credit score (which means they need to do a hard credit inquiry to determine your rates).
“Can I defer my loan? Do I have to pay interest while I am in school?”
In most cases, yes. Deferment is the most standard repayment term that is offered: No payments while in school, or for six months after graduation. After those six months, full payments of principal and interest will begin each month. So if you select a 15-year loan term, your 15 years of repayment begin the day the first bill is due to your lending company.
Whether or not the loan is subsidized, or unsubsidized can matter in terms of interest. You can learn more about in this video. With private lending companies, the loans are most (if not all) unsubsidized. While you are not required to make payments while in school, interest starts to accrue from the day the loan is disbursed, and will continue to build until the loan is paid off entirely. Depending on how much money you take out, payments are typically between $50 and $100 per month, so it might be worth it to pay that each month if you are able to while in school. If this is not something you are able to do though, it is important to understand that loans can grow substantially over the course of the time you are in school.
“Do you really need my social security number? I don’t know it.”
In short, yes. Now is probably a good time to learn your social security number, since you can’t rely on your parents to apply for a student loan in your name for you. Since you are using your personal information (specifically your social security number), legally you have to complete the process by yourself (or else it is identity fraud).
I have talked to many parents who are impersonating their children to try and get information. I understand, they love you and want to help. And I also know you don’t want to apply for a loan, since that is not the fun part of college. Legally you don’t have a choice. I know, I know, federal regulations always ruin the fun, but really this law is in place to keep your information private and protected. This means that the outcome of your loan cannot be accessed by anyone other than you or your cosigner (if applicable). Sometimes you can authorize someone to speak on your behalf, but I don’t recommend doing this.
“I know you said I need to do this on my own, but I really just want my mom to handle it. She always handles everything.”
Yes, and I am sure she is wonderful at handling everything. My mom used to handle everything for me too, but college student to college student, calling is the most important thing you can do. At the end of the day, your signature is on a legally binding contract, so it is important that you understand what you are signing. Since every situation is different, make sure to ask all the questions you need answered. Be proactive in seeking information. If you wait too long to start, you might not be able to get the loan at a cost that makes sense for you.
“I’m ready to apply, now what?”
Once you feel as though you understand the loan process, the next step is starting your application. Most lending companies have online applications, but, if you want to speak with someone like me, you can always call into the student loan contact center and ask more specific questions. As I said in the beginning of this article, these are FAQs to get you started, but the loan process is extremely individual and something that you are going to need to learn yourself as you go. This is a really big decision and it is scary to need to do it yourself, but the individuals like me in the contact centers are there to help you succeed. So what are you waiting for?