Student Loan Information
Student loans are education loans that must be repaid, with interest. Many students rely on federal government loans to finance their educations. These loans have low interest rates and do not require credit checks or collateral.
Student loans also provide a variety of deferment options and extended repayment terms. These loans are a serious obligation, so think about the amount you'll have to repay over the years before you take out a loan.
There are plenty of student loan options if you know where to look. First step is to fill out a Free Application for Federal Student Aid (FAFSA). You will be asked a series of questions about your own income, that of your parents, your tax status, age, and the degree you plan to get. That information will then be used by the government to determine your eligibility for federal loans.
Types Of Student Loans
1. Student loans - These include the Federal Stafford and Federal Perkins Loans.
2. Parent loans - The federal Parent Loan for Undergraduate Students (PLUS) lets parents borrow money to cover any costs not already covered by the student's financial aid package, up to the full cost of attendance.
3. Private Education Loans - Also known as Alternative Education Loans, help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs.
Federal Stafford Loan - The Federal Stafford Loan is a need-based program whereby a student borrows money from a commercial lender or other participating organization.
Federal Subsidized Stafford Loan: The Federal Government will pay the interest on these loans until the time repayment begins, which is six months after the student graduates or ceases to be enrolled at least one-half of the normal course load, or when a student withdraws from an institution. A minimum payment of $50 must be made monthly (but may be higher depending on the total amount borrowed). The loan must be repaid within ten years from the date a student is last enrolled in a participating institution.
Federal Unsubsidized Stafford Loans: The Unsubsidized Loan terms and conditions are the same as Federal Subsidized Stafford Loans, such as loan limits, deferments and interest rates with few exceptions. However, students are responsible for any accruing interest during in-school and deferment periods. Interest accruing during those periods may be paid or capitalized as agreed by the borrower and lender. An origination fee of 3% will be deducted proportionately from each installment payment. Lenders may charge up to 1% of the principle amount borrowed for an insurance premium that will also be deducted from each installment payment.
Federal Perkins loan provides limited funds to needy students at very low interest rates. Interest does not begin to accrue until six or nine months after the student graduates or is enrolled on a less than half-time basis depending upon when the loan was first received. Loans must be repaid within ten years with minimum monthly payments of $40 (payments may be more depending on total amount borrowed).
Consolidation Loans (Direct or FFEL) allow the student (or the parents, if they have a PLUS Loan) to combine several types of federal student loans into one loan with one monthly payment.
Student Loan Costs
An education is important to help you get ahead in life and to earn a decent living. The downside is the costs of student loans. Depending on the type of degree you get and the cost of your education, sometimes it doesn't seem like it was worth the cost to get the degree.
According to The College Board report about two-thirds of college students graduated with debt in 2008. This can seem overwhelming if you can't find a job soon after graduating.
If you are unable to get any scholarships the next best thing is to work while going to school to help defer some of the costs and keep student loans to a minimum. Don't borrow a dime more than you have to!
If you can co-op to help pay for school that is a great way to get experience in your field and earn money to pay toward college expenses. Working and saving money during summer breaks is another way to cut down on costs.
It's important when deciding on a college to attend that you look at costs as well as academic offerings. If you are going to obtain a degree in a lower paying field - such as a teacher, then it's important that you choose a college with lower tuition so your student loans are not so high.
Student loans are necessary for some to get an education. Just be wise about your choices so that you are not stuck paying back student loans 20 years after your graduate.
