With the rising costs of tuition and other miscellaneous fees, paying for a college education has become quite a challenge for countless families and in this current economic climate often times the financial resources are limited so many people turn to financing Financing a college education is perhaps one of the best investments a young person can make because you are investing in your future and the payoff can be exponentially more gratifying because not only do you come come out of it with an education and a solid skill sets that make you more appealing in the job market but also you are equipped with life skills.
However, financing your education can also be one of the more confusing choices, that is if you do not even know where to start looking, but with preparation, and thorough, careful research this does not have to be such a daunting task.
Aside from scholarships and grants, which is money that does not have to be paid back, awarded on the basis of need, merit, or employment benefit, there is generally only loans left in order to subsidize in part or finance completely, college costs. Needless to say, loans have to be repaid. Here are the various types of loans:
Stafford Loan
Stafford loans are low-interest loans for students who meet certain eligibility criteria, to help with the cost of higher education. The lender in this case is the United States government (more specifically, The US Department of Education). There are two types of Stafford loans: subsidized and unsubsidized. Subsizided loans are awarded based on need and you are not charged interest while you are a full time student.
With an unsubsidized loan you do not have to demonstrate neediness and interest starts accruing the moment the money is paid out. For both, the school will determine the amount of the loan. You will also need to fill out a FAFSA (Free Application for Federal Student Aid) in order to be eligible for either one. Also, please note, the student will be listed as the borrower for these loans.
Federal Perkins Loan
Another goverment loan program that provides low-interest loans to students with a financial need. The financial aid department at the school of your choice ultimately decides the amount of your loan based on the results of your FAFSA application. Interest starts to accrue once a student is no longer enrolled full-time. Also, it is important to note that if you are planning on taking a job in the military, teaching or certain public professions you may be eligible to have all or part of your loan forgiven (or cancelled).
PLUS Loans for Parents
These loans are designed for parents of dependent students, as well as Graduate students. In order to be eligible for a PLUS loan, parents must not have an adverse credit history. To apply the parent must complete a PLUS loan application as well a Master Promissory Note (which is merely a promise to pay). Repayment period starts sixty (60) days after the loan is disbursed. This loan cannot be transferred to the student.
Smart Option Student Loan
This is a private loan offered through SallieMae. The Smart Option loan offers three repayment options, competitive interest rates, and students can borrow up to 100% of your school-certified costs.
Bank Loans
Many parents and some students take advantage of private student loan options offered through their personal banks. Generally, people who go this route have good credit so they can take advantage of lower interest rates. Another advantage is that most banks and credit unions will defer repayments until after the student has graduated from college; thereby alleviating the burden of repaying a loan while in still in school.
There are certain things you should keep in mind while shopping around for a loan, like what is the annual percentage rate, what is the total finance change, what are the exact provisions of the loan, is there a grace period for the repayment of the loan. etc?
