What Types of Student Loans are there?

Many people do not know where to start when considering student loans or even private student loans. The first thing you should do is study up on the different types of loans that are available. You may consider taking notes so that you can carefully review the different types and determine what you might qualify for and what types would best fit your financial situation.
First you apply for all of the grants and scholarships you can get your hands on. When you determine how much of your tuition will be covered by these types of awards, then you will have an idea of how much student loan money you should apply for. Remember to pay as much out of pocket as possible so that you or your parents do not end up in over your heads when the loan payments come due.
The first loan that most people apply for is the Stafford Loan. Stafford loans are subsidized by the government so your interest is paid for you as long as you are in school. If you have a life crisis that falls into the Stafford Loan guidelines, you may qualify for a loan deferment later on. Again, the government will make the interest payments for you while you are getting back on your feet. Having the government involved makes lending you money a lot less risky. For this reason, you can receive some of the best rates and terms available on Stafford Loans. You also do not have to start making payments until after graduation.
The Government Subsidized Stafford Loan has strict income guidelines and everyone may not qualify. If you do not, then you may qualify for an Unsubsidized Stafford Loan. In this loan, the government is not involved so you will be solely responsible for all of your payments and interest. You will still be able to defer payments until after graduation and in the case of a qualifying emergency. These types of Stafford Loans are the ones that most people qualify for and hope to get.
If your Stafford Loan money is not enough or if you simply do not qualify, your parents may choose to apply for a Federal Plus Loan. Low income families may qualify for a Federal Perkins Loan. These loans are the responsibility of the parents to pay off. They have good terms and interest rates. If you do not qualify, you may consider Private Student Loans.
Private Student Loans can be taken out by parents or students. The application process is a lot quicker and easier than Federal Loans and the terms are still favorable. Private Student Loans have more strict terms and may have higher interest rates, but you have the freedom to use Private Student Loans for whatever you need while you are in college. Your credit will determine what types of terms and rates you receive for your Private Student Loans.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.

Consolidation of Student Loans

Student loans can be consolidated to reduce payments, fix interest rates and extend the life of the loan. Certain loans can be consolidated, including Stafford Loans, Federal Perkins Loans, and PLUS Loans. Although extensions of loans through consolidation can increase the total amount paid by the end of the loan, it can offer some financial relief and simplification of payment plans to student loan customers.
Stafford Loans are offered to students at a lower interest rate than most loans. Eligible students can enjoy delaying payments until after college. Subsidized Stafford Loans are given on a financial need basis. The government pays the interest on subsidized loans during the time that the student is enrolled in school. Unsubsidized loans accrue interest while you are in school and you are responsible for the repayment of this interest. Stafford Loans, subsidized and unsubsidized, can be consolidated into one loan with a fixed interest rate. This will generally extend the life of the loan, but can offer relief from high payments. Consolidation also helps simplify your payments, so that you can make only one payment per month instead of multiple payments with varying due dates to multiple loans.
The Federal Perkins Loan is subsidized by the government like a subsidized Stafford Loan. The government pays the interest that accrues on the loan during the time that the student is enrolled in college. Keep in mind that you must be enrolled at least half-time to qualify. The Stafford Loan has a six month after graduation or withdrawal grace period in which repayment does not begin. The Federal Perkins Loan has a nine month grace period. The Federal Perkins Loan has a special provision for teachers. Teachers may be able to cancel part of the amount that they owe on their Federal Perkins Loans. Teachers can qualify for a percentage of their loan to be cancelled for each year that they teach in special low-income schools, or in areas where there are teacher shortages. The Federal Perkins Loan carries a fixed interest rate of five percent and has a ten year repayment period. This repayment period can be extended through student loan consolidation.
PLUS Loans are sometimes referred to as parent loans. They can also be obtained by graduate students and students in professional study. Unlike Stafford Loans and Federal Perkins Loans, PLUS Loans do not have a grace period. Payments may be immediately due after the loan monies are dispersed. PLUS Loans usually have higher interest rates than Stafford Loans or Federal Perkins Loans, but they are generally not as difficult to qualify for. You are not required to have a financial need to qualify for a PLUS Loan, but you will, however, need to have good credit to qualify. Repayment plans are not as flexible with PLUS Loans, so many people turn to consolidation if they are having trouble repaying the loans.
Many students end up with Stafford Loans, Federal Perkins Loans, and PLUS Loans to repay. Students can now consolidate all of these loans into one easy to manage loan. Most student loans must be repaid within about ten years. But, with consolidation, you can extend the repayment period of these student loans for up to thirty years. This can make student loan debt a lot more manageable and repayment more attainable.

Student Loans: Where to Start?

The world of student loans can get confusing. Students are needing to borrow more and more to keep up with the rising costs of higher education. There are all kinds of options and it may be difficult for students and parents to figure out where to start. There are Federal Stafford Loans, Federal PLUS Loans, and Private Student Loans.

Your first step to getting the money you need for college is to apply for Federal Stafford Loans. In general, they offer the best rates and most flexible terms. If you qualify, you should be able to get a lot of the money that you need to borrow for college. You should also fill out the Free Application for Federal Student Aid (FAFSA) to see if you qualify for other forms of aid. You may qualify for grants, work-study or other types of student aid.

If you can’t get enough from Federal Stafford Loans or from the FAFSA, then your parents might consider helping you out with a Federal PLUS Loan. The PLUS loan offers great rates and payback options to parents putting their kids through college.

Many Private Student Loans are about the same as the Federal PLUS Loans. Sometimes you can find Private Student Loans with little or no fees. This can make them even cheaper than a Federal PLUS Loan. Be meticulous when choosing your lender. Sometimes a better interest rate comes with higher fees, which in the long run will cost you more. On the other hand, you might find a loan that will cost you less than a PLUS Loan.

Many people are turning to Private Student Loans for extra support through school. Students are running into school costing more than they could possibly get through a Federal program. Talk to your school advisor about financial aid options. There may be scholarships available that you can apply for. They can help give you direction when it comes to choosing what is best for you.

Be wary if they try to steer you toward one or two particular lenders. Check out a web site that offers Private Student Loans from multiple lenders. This way, you ensure that your decision wasn’t influenced by any loyalties. The product you choose should be the one that best suits your needs. Not the needs of the advisor. This is not to say that advisors are necessarily swayed by any one company, just be smart about what company you choose. Check out all of your options before you make your decision. After all, taking out Private Student Loans is a big responsibility and your choice will be with you for years to come.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.