Often referred to as Federal loans, national student loans are the primary means through which college students receive the funding they need to get a college education. National student loans are awarded according to an analysis of a number of different criteria which are used to determine a given applicant’s need.
How does the Federal government derive and analyze these criteria? The process begins when a future student petitions the Federal government for help through a FAFSA application, which all students may fill-out and submit free of charge. When a student fills out this FAFSA application, they will include such things as their parents’ income, their own income, their residential status, their marital status, and how many dependents they can claim. All of these factors are then combined to create something called an “expected family contribution” (EFC), which is the government’s rough estimation of what the student should be able to pay without the Federal government’s help in the form of national student loans.
This EFC will be used to determine what the student will actually receive in national student loans in total, as well as how those loans will be divided. For instance, will the student receive a significant amount in unsubsidized national student loans, which do not accrue interest when the student is in school-or will the student receive virtually all of his or her loans in the form of unsubsidized loans? This will be determined by the student’s EFC.
if a student has an unusually high EFC, he or she may want to begin shopping around for private loans, as it is likely that the Federal government will not fully fund his/her college education. There are a number of good alternatives to national student loans, including state organization loans, non-profit organization loans, and even some private lenders with lenient policies.