Life is made from decisions, some small and inconsequential, others you may look back on and think. . . “That was a turning point in my life”. To make a good decision about student loans (a very important decision), requires research and planning.
For the purpose of this article, we’ll assume you have already looked into grants and scholarships, if not, PLEASE do so, since that money does not have to paid back, while student loans are just that. . . a loan and at some point in time, the money will have to be returned.
Assuming you’ve decided you do need a loan, where do you look? The first place should be federal student loans. They are easier to obtain, interest rates are lower, and they are long term loans created with education in mind.
STUDENT LOAN FACT: The first payment on your loan is due six months and 45 days after graduation.
With that in mind, let’s look at the Federal Perkins Loan in more detail. This loan is based on need and that need is determined by information submitted on the FAFSA (The official document used by colleges and universities to determine eligibility for Federal Student Aid). Undergrads can borrow up to $4,000 per year, which is increased to $6,000 per year for grad students.
Next in line is the Federal Stafford Loan which is available to both undergrads and grad students. These loans vary depending on your year of education and current financial situation. Details can be obtained at your college or university financial aid office.
Your Stafford loan can be subsidized or unsubsidized. The difference is simple; with subsidized loans the government pays your interest, while you are responsible for interest payments on unsubsidized loans. Your financial needs and a conversation with your financial aid office, will determine which you are eligible for.
Next on the agenda is where your parents come into the mix, it’s called the Federal PLUS Loan (Parent Loan for Undergraduate Students). This is a low cost loan allowing your parents to borrow the amount of money needed for attendance, less other loans, grants and scholarships, already in effect.
While still a government backed loan, this one is a more traditional and requires a credit check, and is not based on financial needs.
Federal loans were designed to be used; if you qualify (and most will) then these are better and easier to obtain than private loans.
FEDERAL STUDENT LOAN FACT: Under certain situations federal loan re-payments can be deferred for up to three years while you are searching for a job.
Private loans are between the individual and the lending institution. These loans are designed to fill the gaps not met with Federal loans. They are be available from banks, possibly your school and organizations created specifically for private student loans.
When looking at these loans remember. . . your credit will be examined and loan terms will vary; be certain to shop the lenders for their best rates and on your end, protect your credit rating.
FEDERAL AND PRIVATE LOAN THOUGHT: Be conservative, don’t borrow more than you need; and remember that unlike a grant, this money DOES have to be repaid.
Continuing your education and obtaining a degree or advanced degree is the single greatest decision you’ll make. Abraham Lincoln said “Give me six hours to chop down a tree and I will spend the first four sharpening the axe”. Your education is YOU sharpening that axe, the axe that can cut through the adversities of life. Money should not be something that stops you from obtaining your education, and with student loans, it no longer should.
Alan King is a writer that concentrates on helping people better themselves, for cutting edge information you NEED to know about financing your continued education check out his website at http://www.118student.co.uk