Loan Requirements

In 2006, the U.S. Department of Education guaranteed more than $60 billion in student loans for the 2006-2007 school year. If you've received Federal or private loan, there are a few requirements you should be aware of to keep your funding.

Know Early Deadlines
It's important to re-apply for your loans as early as possible to avoid long lines or slow financial aid Web pages. You need to reapply for most loans every year, which means completing a renewal FAFSA. You can file your FAFSA as early as January for the Fall term. If you've obtained a personal loan from your bank or another private lender, contact that lender with questions about the deadlines and other obligations of your personal loan.

Maintain Your Financial Status
Be aware of changes in your financial situation or student status that can affect both your Federal and personal educational loans.

• Taking Time Off: Taking even one term off from your educational program can trigger your loan's grace period and subsequent repayment of your Federal loans. Some private lenders also have this policy, so be sure you know the terms of your loan.
• Student Status Change: Dropping below half time can also trigger your grace period and repayment. You may also be eligible for more financial aid by taking more classes and becoming a full-time student.
• Graduating or Leaving School: Typically expect to begin your loan repayment about six months after you graduate or leave school for any reason.

Consider Your Interest Rate
Having a sound financial plan is an important part of maintaining your loan. A loan that comes with an adjustable rate may initially carry a low interest rate in order to entice borrowers. Fluctuations in the market, however, can increase the adjustable rate. Conversely, a fixed rate loan may initially be higher than an adjustable rate, but the rate remains the same even in a changing market.

If you've chosen an adjustable interest rate on your private loan, make sure your lender sets a rate change maximum for the life of your loan. If your lender makes no promise about keeping rates reasonable over time, find a lender that will. Always remember that loans with adjustable rates will usually feature both a competitive market rate and a rate change maximum.

Your Loan's Future
If you cannot make timely payments on your student loan, the loan may go into default. A private or Federal loan in default can be sent to a collections agency for resolution, or the government could garnish your wages every pay period until the loan is repaid. It may be possible to defer the payments on your loan if you become a teacher in certain under-represented areas or join certain military or service organizations. Remember that in most situations, you are required to make timely payments on your loan. Like a vehicle or home loan, failing to make timely payments can negatively affect your credit.

Keep track of the details of your loan information and you're less likely to be surprised by a changing interest rate or a missed deadline. Educate yourself and keep your loan.