What Kind of Student Loan Is Right For Me?
There are two sources for college student loans — the federal government and private lenders. In order to obtain most federal college student loans, you will first need to file the Free Application for Federal Student Aid (FAFSA). In most instances, the FAFSA is required for all federal financial aid including federal college student loans. There are four main federal college student loan programs:
• Federal Stafford College Student Loan
• Federal PLUS College Student Loan
• Federal Graduate PLUS College Student Loan
• Federal College Student Loan Consolidation
The Federal Stafford College Student loan is made in the name of the student and is based on need (only the subsidized portion), and does not require a credit check (it is guaranteed by a private guarantor or lender and backed by the government rather than credit/income/assets, etc.). Also, this type of student loan does not have to be repaid until after the student graduates, leaves school or stops attending on at least a half time basis. Some schools offer Stafford College Student loans directly through the federal government. These are commonly known as Direct Stafford College Student Loans. The schools that offer Direct College Student Loans are known as Direct Lending Schools. Other schools offer Stafford College Student loans through banks or other lending institutions. These schools and student loans are commonly called FFEL schools (Federal Family Education Loan). In order to obtain a federal Stafford College Student loan through a FFEL school, you will need to choose a lending institution.
Federal PLUS College Student loans are made in the name of a parent. While they are going to require a credit check, the credit criteria to obtain a PLUS Student loan are not as stringent as they are for other types of consumer loans. Repayment of a PLUS student loan begins after the loan is fully disbursed. Again, some schools offer PLUS student loans through the federal government and others offer it through banks or other lending institutions.
The Federal Graduate PLUS College Student Loan is just like the PLUS Student Loan for parents except that it is made in the name of a graduate student. However, you must first use your Federal Stafford student loan eligibility before applying for a Federal Graduate PLUS Student loan. It is important to remember that the Federal Graduate PLUS Student Loan requires payment as soon as the loan is fully disbursed. Deferment options are available while you are still attending school at least part time. Your financial aid office can give you more information on there guideline.
Federal college student loan consolidation is for students who are repaying there student loan or parents who wish to extend the repayment period on their current PLUS College Student Loan and obtain a fixed interest rate for the life of the loan. You can combine all of your eligible federal college student loans into one loan with a Federal College Student Consolidation Loan. Consolidating also locks the interest rate you pay on your student loan.
If federal college student loans are not enough to cover your educational expenses, if you do not wish to make payments of principal and interest while in school or if you want a college student loan that is in the student’s name, there are private college student loans (also called alternative student loans). Private student loans are provided by banks and other lenders. They must be used solely for education expenses, but do offer convenience and flexibility usually not found in other federal student loan programs. However, you will need fair to good credit and most students will need a qualified co-signer in order to obtain a private student loan. In addition, while interest rates, fees and other student loan program terms can be competitive, they vary widely from lender to lender. It is important to compare your options before choosing a private college student loan.
The bottom-line with student loans is that you do have options when you cannot pay all of your college costs out-of-pocket. Do your research using the internet to be sure you get the college student loan that is right for you.
