When it comes to getting a college education the majority can agree that the costs can be staggering.
Even the least expensive colleges can add up over a four or five year period of time, creating crippling debt for those who do not qualify for some of the better grant programs of substantial scholarships.
The problem lies in the fact that the parents of most traditional college students make too much money to qualify for the free financial aid that is available as needs based, and few qualify for the limited number of scholarships that are available, based on merit.
Even among those that qualify competition is fierce. Enter the student loan. There are all kinds of student loans and unfortunately with rising costs associated with college attendance and the growing necessity of a college degree for success, it is becoming more difficult to pay the price that is of higher education.
There are three types of loans that are commonly found for college students. They include federal student loans, federal plus loans, and private student loans. Each type of loan has advantages and disadvantages that are unique to that particular loan.
Student loans. There are three different types of student loans: subsidized, unsubsidized, and Perkins loans.
Subsidized student loans are loans in which the interest is deferred until graduation or you cease to be a qualifying student.
What this means is that while you are responsible for repaying the loan upon graduation the interest on these loans does not begin to accrue until you begin repayment 6 months after graduation or your cease to be at least a half time student of the university.
You must qualify based on your income in order to receive a subsidized student loan. While the needs requirements for these loans isn’t as grave as those required in order to receive a Perkins loan you must still qualify.
Unsubsidized student loans do not require qualification on a needs basis. You must be a student and enrolled at least half time in order to receive an unsubsidized student loan.
The good news however for those who do not qualify based on needs for other student loan options is that this type of loan is available to all qualifying students regardless of need. The interest on these loans however begins to accrue immediately, which means they can really add up over time.
Perkins loans are only available to students who display exceptional financial need. These loans are available at a 5% interest rate (at the time of writing) and are available to both graduate and undergraduate students.
Perkins loans are extended through the university you attend and will be repaid to the university unlike the other types of student loans, which are repaid to the lending agency.
PLUS loans are loans that are taken out by the parents of students who need the funds in order to cover educational expenses.
The maximum amount that can be borrowed is the cost of attendance minus any financial aid awards the student has already received. The repayment on these loans begins 60 days after the loan is dispersed and the repayment period can be up to 10 years.
In order to cover the costs involved in education that go above and beyond what the government recognizes as acceptable college related expenses you can opt to go the route of private student loans rather then relying solely upon federal financial aid for your student loan source.
These loans require that you qualify in order to receive them based on your credit rather than your need and must be used for educational purposes only.
With these particular loans you really need to make sure you read all the fine print as different companies offer different conditions and different perks.
You should really take the time and compare prices and options before taking out a private student loan and this should be done only as a last resort. College loans tip. – you should be conservative with student loans and borrow wisely, because the amount of money for college that you borrow might have long-term effect that can influence your lifestyle.
Student loans for many can be the difference in attending college and getting the education you are hoping for and not being able to pay the high costs that go along with higher education. For this reason you should treat them with respect and not take them lightly.
But be aware, many college graduates find that for the first 10-15 years after they have graduated college, they are essentially indentured servants to their student loan debts. There are many reasons for this. First of all, those taking out student loans need to understand that a college degree does not guarantee a high starting salary.
Beyond that, a college degree is no guarantee that there will be a glut of jobs available upon graduation. The truth is that most college grads take anywhere from 6 months to a year to find a job, and then not necessarily, in their field. Even the starting salaries can be far less than anticipated.
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