General guidance and advice on Student Loans

Very few students in today's society have the means to fund their entire university or college education so have to find ways to cover the cost of their education. Although getting a college or university education requires hard work by the student, getting information and financing their education can be overwhelming if the students have no idea where to start looking. Even after receiving grants and/or scholarships, which is money that students do not pay back, many students still require additional funds to cover the remainder of their schooling and expenses. This is why the majority of students take out a loan. It relieves some of the financial burden by helping pay for their college or university education, allowing them to remain in school.

In some cases, students are able to borrow money for their schooling from the college or university they are going to attend but usually they need to select a lender. The least expensive lender with the best interest rates and terms is definitely the federal government. Two sites that provide excellent information are the FAFSA website and the Federal Direct Loan website

Along with federal student loans there are various other loans such as consolidation and alternative. The first thing a student should do is fill out and file a FAFSA or Free Application for Federal Student Aid form. This is the most important step and allows students access to federal loans for students including PLUS, Stafford and Perkins loans. Most borrowers or students do not realize the huge number of other loan and aid programs that require an FAFSA filed by the student. Students that fail to fill out and file a Free Application for Federal Student Aid form certainly remove themselves from receiving almost all forms of student loans and aid.

Two federally based loans that require no collateral or credit checks are the Perkins and Stafford loans. These types of government loans have excellent repayment, deferment plans allowing students great flexibility and low interest rates. The two forms of Stafford loans are Federal Direct Student Loans that go directly to your college from the government and Federal Family Education Loans that loan associations, credit unions, banks and other private lenders provide. There are both unsubsidized and subsidized Stafford loans. An unsubsidized loan means that the student is responsible for paying the loan interest whereas a subsidized loan means, as long as the student remains in school and until six months after graduation, the government pays the loan interest. Perkins loans are normally only for students that are seriously financially disadvantaged. As long as the student remains in school and for the first nine months after graduation, which is a grace period, the student pays no interest on the loan. There are also private lenders that provide loans to students although to be eligible for most requires a very good credit rating. Some students choose private loans because the federal loans do not always provide sufficient money to cover their schooling. Before taking out a student loan, check to make sure you get the best rate and terms possible.

Resources:

• FAFSA
• Federal Direct Loan