By: Mevish Jaffer
College: a time to attain higher education, get on the road to self-discovery, and pile on a mountain of student loan debt? The truth is if you’re not careful, that’s exactly what could happen! How many times have you heard the saying, “education comes first?” While completely true, you have to ask yourself, at what price does it come first?
Everyone attends college at a different stage in their life. Some might make the transition directly after high school, while others choose to enter the work force and eventually go back when convenient. However, the one factor that remains common for every type of student involves the necessary funds that are required to finance a college education. Because not every college hopeful can cover tuition and fees on his/her own, student loans are often taken out in order to pay for classes, books, etc.
Federal and Private Student Loans
Federal student loans are supported by the U.S. government. They can be attainted directly through your school, university or by banks and student loan lenders by way of the Federal Family Education Loan Program. In comparison to private loans, these types of loans generally have lower interest rates attached, various methods of repayment options, lengthier repayment periods and less stringent credit requirements. The process for receiving a federal student loan starts by filling out and submitting the Free Application for Federal Student Aid (FAFSA). Federal student loans can either come in the form of need-based assistance or specifically geared towards parents of potential college students.
- Perkins Loan – This loan offers a fixed rate of 5% to undergraduate and graduate students who can prove financial need. Based on your individual level of need, undergraduates can borrow up to $4,000, while the graduate student loans can extend up to $6,000. The funds from a Perkins loan are dispersed directly from your university and eligibility is not contingent upon part-time status of enrollment.
- Stafford Loan – This loan doesn’t require that you prove financial need; basically anyone can apply for a Stafford loan. This type of loan comes with a fixed interest rate and can either come in the form of a subsidized or unsubsidized loan. The difference is, on a subsidized Stafford loan, the government pays the interest while you’re in college and you pay the interest on an unsubsidized Stafford loan, but have the option to defer making any payments until your graduation. Stafford loans do require however, that you are enrolled at least half-time.
- PLUS Loan – The PLUS or Parent Loan for Undergraduate Students is specifically aimed at parents of dependent undergraduate students who are enrolled in college at least half-time. A higher fixed interest rate is attached to this type of parent student loan versus a Stafford loan and the repayment period begins while you are still in school.
Unfortunately, federal loans do not always cover the entire cost of tuition, which is one of the reasons that the market for private student loans has been increasingly growing. There are both advantages and disadvantages attached to private student loans so the best thing to do is evaluate them both and determine your need.
With a private student loan, there is no need to fill out a FAFSA, you can borrow up to 100% of the cost you will need to finance your college education, you may be eligible to retain lower interest rates if your university officially confirms enrollment and the check is sent directly to them and the funds you receive can be used to cover more than just tuition and books, including room and board and supplies, such as a computer. On the flip side, private loans are stricter on their edibility requirements. Credit checks are used to determine your approval as well as asses the interest rate that will be attached. For that matter, the interest rate also has the potential to increase over the life of the loan.
Student Loan Consolidation
Getting back to the question, at what price does your education come first? Should you find yourself in debt as a result of student loans, don’t panic! There are ways to get debt help. The most common way to do so through student loan consolidation which allows youi to consolidate all of your debt into one single loan. Naturally, you will have do some research in order to find a capable lender who will offer you a fair interest rate in today’s competitive market. You can also visit premierstudentloan.com for further information on your student loan options.
