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College students need money to pay for tuition, books, room and board, transport, school supplies and students may need to buy a computer. The cost of tuition has gone up and students and parents are finding it hard to pay directly from their savings. After exhausting financial aid which includes grants, scholarships, work-study programs the parents and students turn to federal student loans and alternative loans.
 
There are federal student loans and private student loans for students which parents and students should know about before applying. College education has become expensive and the U.S. Department of Education grants federal loans through Federal Direct Student Loan Program.

Federal student loans are attractive because they are charged fixed interest rates and depending on the students financial needs the interest may be subsidized by the government. These loans offer discount interest which means that the repayments are lower than the alternative student loans. Federal student loans are flexible offering deferred repayments so the student starts repaying the loan when he starts earning income. However the student must not owe money on federal student grants and must not have default federal student loans. Subsidized federal student loans do not accrue interest when the student is in college. Unsubsidized federal student loans accrue interest when the student is in college.

To apply for a federal loan the student should fill the FAFSA form and meet the requirements. The student should apply for federal loans before applying for alternative student loans from banks and other financial institution.

When the federal financial aid grants and scholarships are not enough to pay for the entire tuition the student and parents turn to alternative student loans to pay. The private student loans may have variable interest rates which are determined by the lender which depend on the credit rating of the person applying whether it is the parent or the student. There may be fees which are also determined by the lender. The student/parent should fill a self-certification form. A loan application form is completed and the information verified. The credit rating of the applicant is considered and the loan terms accepted before the loan is granted.

The student should apply for financial aid in form of grants and scholarships and work-study. When this option is exhausted he should apply for federal student loans and finally private student loans.

All college student loans have to be repaid regardless whether the student completed the college education or found a job after completion.

When repaying the loan the students should select the repayment option that suits their financial plans. There are different repayment options which are 10 years and over. The student must consider his financial position. There are options where you can pay while in school and pay within a shorter time when out of school or defer payment until you finish school. There are many options and the student calculator will be used to compare the options and choose the best for your financial situation.

Last modified onTuesday, 02 April 2013 15:41
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