College is a huge investment. It’s expensive, but you want your son or daughter to have the best chance to create a good future for themselves, right? Even if you qualify for financial aid, there will still be times that the money offered is not enough to cover the costs. This leaves you and your student scrambling to pay the bills. A student loan is a way to ease the financial stress. They do have to be paid back, but responsible borrowing can be the way to get the educational bill paid.
Federal PLUS Loans
Parents of graduate and undergraduate students can apply for these loans. The student is eligible whether they are attending full or part time. These loans aren’t awarded on the standard of financial eligibility, rather on the cost of tuition and the credit rating of the parents. The interest payments are low, but so are the loan amounts. They are intended as a stop gap payment for costs that aren’t covered by other student loan and financial aid programs. Federal PLUS loans are very popular with graduate students and offer several repayment terms which make it easier once schooling is done. Repayment typically begins 2 to 3 months after the full loan amount is given, or after graduation.
Stafford Federal Subsidized Loans
A highly sought after financial needs based loan is the Subsidized Federal Stafford loan. Loan sources include credit unions, banks, and federal government funds. They are both regulated by the federal government. The loans are long term, much like a car loan or home mortgage. One must meet income qualifications and maintain a “C” average in classes to qualify for them. They are always offered with low interest rates to make them affordable. The government agrees to pay the interest while the student finishes school and any deferment period that is approved.
Stafford Federal Unsubsidized Loans
The Unsubsidized Stafford loan is another highly sought after college loan that is designed to help any student that needs financial assistance with school. It isn’t based on financial need. This makes it an attractive option for those that don’t quite qualify for other types of financial aid. Since it’s unsubsidized, the interest is the sole responsibility of the borrower, no matter what the circumstances are. The payments can be deferred at times, but the interest will always be added to the loan. Students that are designated as Independent under the current federal guidelines of eligibility can easily qualify for this loan.
Federal Perkins loans don’t offer high amounts, but the interest rates are really low. There are only limited funds available, so you have to sign up quickly when you have the need. These loans are for extreme financial hardship cases. Interest doesn’t start to add up until 9 months after student graduation, or once the student falls below half time status. These loans can be harmful to your credit if you miss a payment or completely default as it will be reported to all major credit bureaus.
Private Lending Institutions
If you have a solid banking history, many banks and lending institutions can offer low interest rate loans to help fund higher education needs. You can always shop around to different banks and compare rates. Credit card companies are also starting to jump on the educational loan band wagon. If you do your homework and contact as many money lending sources as possible, you will find the right loan at the right interest rate. The one thing that all lenders love to do is compete, and competition can save you money.
It is suggested that before you borrow for college, you determine how much you are going to be required to pay and assess your cash-flow and your assets. Figure out if there are ways to stretch your budget and then when left with no other options, then find the most appropriate loan for your circumstances. Do not just borrow without a plan to pay the loans back. If you have a hard time locating the funding you need for your child’s education, then you might want to consider getting the help of a professional service. There are trained experts that can help you find the best and most affordable options to get your child the degree they need to start a successful career and future.
Written by Jason Garcia. Jason lives with his family in Oregon.