Loan Requirements

The U.S. Department of Education will make or guarantee more than $60 billion in student loans for 2006. If you're attending school on Federal or private loans, there are a few things you can do in order to keep your funding.

Make Early Deadlines
Remember that you'll need to reapply for most loans every year. Re-apply for your loans as early as possible to avoid long lines or slow financial aid Web pages. Reapplying for some loans means completing the FAFSA, which you can file as early as January for the Fall term. If you have a personal education loan from your bank or another private lender, contact that lender with questions about deadlines and other obligations.

Maintain Your Status
Make sure a change in your financial situation or student status doesn't adversely affect your loan. Both Federal and private loans can be affected by the following:

• Change in Student Status: Dropping to below half time.
• Taking Time Off: Taking even one term off may start your grace period and repayment on your Federal loans. Some private lenders also have this policy.
• Leaving School: Typically expect to begin your loan repayment about six months after you leave school for any reason.

Consider Your Interest Rate
An important part of keeping a loan is having a sound financial plan. A loan with an adjustable rate may initially carry a low interest rate in order to entice buyers. However, market changes can increase an adjustable rate. Conversely, a fixed rate loan may have a higher initial interest rate than the adjustable option, but that rate will not change with a fluctuating market.

If you've chosen a private loan with an adjustable rate, make sure your lender sets a rate change maximum for the life of the loan. If your lender makes no promise about keeping rates reasonable, find a loan package that does. Keep in mind that loans with adjustable rates will typically include a competitive market rate with a rate change maximum.

The Future of Your Loan
If you fail to make timely payments, your loan may go into default. A Federal or private loan in default may be sent to a collections agency, or the government could take some of your wages every pay period to pay off the loan. It may be possible to defer your loan payments if you become a teacher in certain under-represented areas or join certain military or service organizations. In most situations, however, you're required to make timely payments on your loan. Just as with a home or car loan, failing to make payments can negatively affect your credit.

Make sure you keep track of all loan information that is sent to you and you'll be less likely to be surprised by a changing interest rate or a missed deadline. Educate yourself and keep your loan.