You have gotten all the grants and scholarships you can, but you still need money for your education. It’s time to look at loans. But which is better – federal loans or private loans?
Federal loans
If you need to take out a loan to help pay for your education, you should always look at federal loans first. The largest source of education loans around, federal loans are long-term loans with low interest rates designed for students who need money for their educations. They have several benefits when compared to other borrowing options, including
-Lower interest rates
-Options to postpone payments
-Longer repayment terms
-Easier credit requirements
Eligibility for some of these loans, such as the Federal Perkins Loan and the Subsidized Federal Stafford Loan, are needs-based, while others are not. You will need to complete a FAFSA to apply for these loans.
The most common federal student loans are listed below:
Federal Perkins Loan
The Federal Perkins Loan is a low-interest loan available to students who have exceptional financial need, based on the information provided on their FAFSA. Undergraduates can borrow up to $4,000 per year, while graduate students can borrow up to $6,000 per year.
Federal Stafford Loan
The Federal Stafford Loan is available to undergraduates and graduate students. Loan amounts depend on a student’s year in school and whether they are financially dependent or independent. Your college’s financial aid office determines your eligibility.
Stafford loans can be subsidized or unsubsidized. Financial need determines which type a student is eligible for. Subsidized loans are based on financial need. The government pays the interest while the student is in school, in deferment, and in their grace period.
Unsubsidized loans are available to all students, regardless of income. The student is responsible for all interest.
Federal PLUS Loan
The Federal PLUS Loan (Parent Loan for Undergraduate Students) is a low-interest education loan for parents. Each year, parents can borrow up to the cost of attendance, minus other financial aid received (scholarships, grants, student loans, etc.).
The PLUS loan is not based on financial need. Qualified applicants must pass a credit check.
Private loans
Private loans are designed to supplement federal loan programs and are available from schools, banks, and education loan organizations. They are usually used to cover education costs that cannot be met by federal aid.
Terms for these loans vary according to the lender and your credit history. Keep these things in mind as you consider taking out a private loan:
-Private loans have credit requirements, and you may need a co-signer
-The lender determines the interest rates and fees, which may be affected by your credit score
-Private loans may not offer deferment options
-Private loan programs may offer borrower benefits, such as interest rate discounts or rebates
No matter what type of loan you take out, be conservative and borrow wisely! All loans have to be repaid, whether federal or private.
This article is distributed by NextStudent. At NextStudent, we believe that getting an education is the best investment you can make, and we're dedicated to helping you pursue your education dreams by making college funding as easy as possible. We invite you to learn more about Federal Student Loans or Private Student Loans at http://www.NextStudent.com .
How to Search for Scholarships
Finding scholarships for college or a major university is a lot like picking an actual college. It is not an easy process or something that just happens overnight, but rather, it takes hard work, dedication, and a lot of research to find the scholarship opportunities that are best for you. On the one hand, you are putting a lot of time, work, and effort into finding a scholarship. But just think about the thousands of dollars that you can save by obtaining a scholarship for college.
Parent Loans
If you are entering college soon, but have no idea how you are going to pay for anything from books to your actual tuition fees, chances are that you are going to be relying upon your parents in some way, shape, or form. For most first-time college undergraduates, college or university tuition is either paid through grants, because parents’ financial information allows the use of grants, scholarships, because of academic or athletic prowess, or loans, because students can not pay for college or a university outright.
No-Cost Student Loan Consolidation
A no-cost student loan consolidation – doesn’t that just sound too good to be true? Think about it. You have just accrued thousands of dollars in debt through student loans after 4 years of college, or possibly even more. Then, a company offers to take all of your loans off of your hands, put them into one central loan, and do it all for free! Well, while it might not be too good to be true, it all depends around your particular situation, which could make this a “free” process, or could still work out to the benefit of the consolidation company that you are working with throughout the process.
