Student Loans for ALL College Students
A financial necessity for most students today
While it would be nice to be able to pay for your education with your savings, a little help from your parents and maybe a scholarship or grant, the reality is that most students have to borrow money to afford a post-secondary education. Though it is never fun to go into debt, do not be afraid of getting a student loan for college. Think of it as an investment in your future.
Federal Student Loans for College
If you need to take out a student loan for college to help pay for your education, the federal government should be the first source you look to. The government lends more money than any private organization, and the student loans for college they offer are specially designed to minimize the financial burden placed on students.
In order to qualify for a federal student loan for college, students must complete the Free Application for Federal Student Aid; more commonly know as the FAFSA. The FAFSA must be completed at the end of every year and can be submitted starting on January 1. It is recommended that you submit it as soon as possible. The government then reviews your FAFSA and sends you back a Student Aid Report (SAR) that notes all financial aid for which you and your family are eligible.
There are three basic kinds of federal student loans for college:
• Stafford–This is the most popular student loan for college. Every student is eligible for an unsubsidized Stafford student loan at any point in his or her college career, regardless of whether he or she can demonstrate financial need (although if you can demonstrate financial need, you may receive a subsidized Stafford loan). The amount that can be borrowed increases each year as you progress through college. The interest rate is fixed.
• Perkins–Only college students who can demonstrate financial need are eligible for a Perkins student loan. The federal government provides colleges with a limited pool of money, and colleges are responsible for lending it to the college students who need it most. Perkins student loans have the lowest interest rate and fees of all student loans for college, but only up to $4,000 can be borrowed.
• PLUS–The Parent Loan for Undergraduate Students, or PLUS loan, is unique because it is for parents, not students. In order to qualify, parents must demonstrate financial need. The interest rate of a PLUS loan is higher than that of a Stafford loan, but a much larger amount can be borrowed.
The difference between subsidized and unsubsidized student loan is very simple. In the case of subsidized student loans for college, the government pays the interest while the student is in college. On the other hand, students must make all interest payments on an unsubsidized loan. In all cases, subsidized loans are preferable to unsubsidized loans.
Private Student Loans
In addition to federal student loans, students can get loans from private sources such as banks or finance companies. These loans generally offer higher lending limits, but they also have higher interest rates. Some require a co-signer and a credit check.
