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Types of Student Loans

It is now time for you to start planning your college career. It is probably your junior or senior year and you want to find out as much information as you can about financing your four or more years as an undergraduate college student. Hopefully, you have done very well in school and don’t need much assistance because you’ve received an academic scholarship. But we all know that college is getting more expensive each year and many scholarships don’t do the trick anymore. If your family can prove they’re in need of financial assistance, you may be able to get a federal grant. But if it seems as though you are still coming up short in the financial arena, then your next step may be to look at student loans.

Student loans are loans given to students through established financial institutions. They help the student pay for college and typically don’t require that they pay any money back until after they graduate. As long as you are a student in school, you are cleared of having to pay. But as soon as you lose that status, you are required to begin payments. And depending on how much money you borrowed, you may have to pay for the next 30 years.

When deciding how much money you want to borrow, it is best to work with your school’s financial aid office to gauge how much your tuition, room and board will cost you, then add in the expenses for books, meals not covered in the meal plan, gas money, and any other expenses you can predict. If you are realistic when borrowing money, you will find that you usually won’t have to worry about paying as much back later in life. I say this because it is easy to want to borrow the largest allowable dollar amount so that you can buy plenty of new outfits, but taking out student loans is like using a credit card – the interest can be very high – so you have to take responsibility early so that you won’t regret your choices later.

Now that you’ve learned the basics of student loans, let’s look at the well-known borrowing options to see what might work best for you.

Perkins Loan

Perkins loans are typically reserved for people who are in financial need. Your level of need is determined by the information you fill out on your FAFSA (Free Application for Federal Student Aid). On the FAFSA form, you or your parents (if you are their dependent) must tell your income and provide proof based on the previous year’s tax forms filed with the IRS. Once the representative from the school you’re attending looks over your FAFSA they can help determine how much they’re willing to grant you for your Perkins loan. In many cases, students receive the full amount allowable through the government, which is $4,000 for undergraduates and $6,000 for graduates – but again, it is totally up to the school to decide.

In order to become eligible for a Perkins loan, you simply apply for one – or in many cases, the school will automatically consider you depending on your financial status.

Parent PLUS Loans

Federal Parent PLUS loans are college student loans taken out by parents who want to pay for their child’s educational expenses – and have good credit. The requirements for being able to take out the loan for the child include the student being a dependent and being enrolled in school at least half-time at a college or university approved by the program.

Like the Perkins loan, a PLUS loan has a low interest rate mandated by the government. Also, like the Perkins loan, you have to fill out the FAFSA to be eligible. However, you don’t have to be need based to qualify. And it allows you to take out the cost of the full amount of the student’s education, including tuition, room and board, books, lab fees and gas money with no need for collateral – and the interest is tax deductible.

Stafford Loan (Subsidized)

Subsidized Stafford student loans are also mandated through the federal government. And they are also based on financial need. If you or your parent is not making enough money to cover tuition – as determined by the school – you will be considered to have financial need. You must fill out a FAFSA to be eligible for this loan, and the amount you will receive is determined by your school. The maximum amounts you can receive for these student loans are $3,500 for freshman, $4,500 for sophomores and $5,500 for juniors and seniors.

In order to continue your eligibility of the loan, you must be enrolled in a qualified school as a half-time student or more. Once you graduate, you will begin to pay off the loan (after a 6 month grace period that allows you to secure employment).

Stafford Loan (Unsubsidized)

The unsubsidized version of the Stafford loan does not require that you have financial need to obtain one. Like the subsidized version, you do need to fill out the FAFSA to be eligible; however, anyone is actually able to get one, as long as funds are available. With this loan, you can request as much as you want – and may actually get the full amount, which follows the same maximum borrowing amounts as the subsidized version.

The major difference between subsidized and unsubsidized is that the latter accrues interest from the time you take out the loan until it is repayed, whereas the subsidized loan has the interest paid by the government until the student is no longer in school with at least half-time status. If you choose, you can pay on your accruing interest while still in school to soften the blow after graduation. Or you can wait to pay later without penalty – you just will have more tacked onto your repayment plan.

Private Loans

If you find that you are in need of financial assistance but you are not able to take out any of the above student loans, then you can always try a private loan through a private financial institution. Some of these institutions include Astrive, Sallie Mae and Citibank. The eligibility requirements and repayment terms vary with each institution and should be checked on individually to decide if this is something you want to pursue.

Other Financial Assistance

In addition to student loans, grants and scholarships, many schools enroll students in a federal work study program, where they are given an on-campus job that may range from 10-20 hours of work each week to help them bring in additional money for school. However, if for some reason you are in debt to your school, the money from your work study check goes to the school before you see it, seeing as you get paid through the school’s cashier.

Learning the basics of student loans will help you make informed decisions before diving in and making choices that you very well may regret for the rest of your life. So your best bet is to do your homework on student loans now, this way you can ensure you’ll have a worry-free and successful four years of college to look forward to.

Attending college is a very important decision in a person’s life. When money is the biggest deciding factor, college scholarships can make all the difference. With competition rising among students and tuition consistently increasing, finding the right scholarships can ease a lot of pressure. Knowing where to look for scholarships and what to be wary of are also important in taking a step toward a college education.

There are many different kinds of scholarships available. College specific scholarships are those that colleges offer for a specific purpose. A sports scholarship is an example of this. Colleges will offer a certain amount of money or certain types of benefits to prospective students who have excelled in a specific sport. Scouts from different colleges can visit students at different high schools to find potential candidates for these scholarships.

Another type of scholarship that colleges may offer is an academic scholarship. These scholarships can be earned by having a stellar academic record. Sometimes students do not even need to apply for these scholarships. Colleges may offer these in the financial aid package they give to the student.

Scholarships that do not come from colleges come from private organizations like religious groups, corporations, schools, the military, and unions. These will usually have an application for the student to fill out and may require the student to have some connection to the specific organization. Therefore learning the requirements for these applications is very important. These can be found simply by getting in touch with your own community whether it is through your church, your school, or your parent’s employer.

State and federal financial aid options are also available to students. The amount a student can get from this depends on the student’s and parent’s income. There are several different grants and loans that a student can get. Grants are awards that do not need to be paid back while loans must be paid back usually after a certain period of time after graduation. Loans are also available to the student’s parents.

Scholarships can be found online as well as from high school counselors. Searching for scholarships online can return lots of results, but can be narrowed down by closely looking at the requirements and due dates. Once a student narrows down the results based on whether or not they qualify to apply for the scholarship and whether or not the scholarship is still available, it is all a matter of preparing the application correctly and competently. It is safe to assume that hundreds, maybe thousands, are applying for the same scholarship.

Students should be cautious when looking for scholarships in order to avoid scams. If an organization asks for money up front from the student, it is best to ignore the request and look for a different scholarship. Scholarship scams may also offer scholarship services or seminars to help students find money for college. These scams will require the student to pay money or make some kind of investment.

Finding college scholarships could be easy if you know where to look for them and what to be cautious of. Usually you only need to look within your community. For example, your parent’s employers may offer a scholarship through their company. The school you attend will be a good resource for finding scholarships that either they offer or that they know about. Looking online could prove to be rewarding as long as you avoid scholarship scams. Paying close attention to due dates to be sure that you can still apply for a given scholarship, and also to make sure you are not going to miss the opportunity, seems like a small factor, but could have a big impact on whether or not you receive an award. You can find more about this topic at http://vhsgators.com/.