Student loans for college provide the much-needed financing for those who want to pursue a college education. Without these loans, it can be very difficult for a student to cope up with schooling expenses such as books, supplies, allowance, and more. Even with their parents’ support, acquiring a loan is still a big help especially during these times of crisis.
In this article, let’s talk about college loans provided by the government and loans provided by private lending companies.
Student Loans Funded by the Government
Federal student loans are classified in two main categories- Stafford federal loan and Parent PLUS loans. Stafford loans are offered for students who can’t afford schooling on their own while PLUS loans are especially offered for parents who have that are dependents about to enter college.
There are income qualifications to be eligible for the subsidized Stafford loans. A subsidized loan frees up the borrower from paying the interest rate of the loan. Meanwhile, unsubsidized Stafford loans are available for anyone with good credit history. If you are going to apply for an unsubsidized loan, you will pay the additional interest charges.
Student Loans from Private Lenders
What about student loans from Private or commercial lenders? As can be expected, these loans have higher rates than Federal loans. However, it is generally easier to acquire them because of the more lenient standards.
You can choose to acquire more than one student loan. In fact, borrowers can apply for a Federal loan and Private student loan at the same time. However, if you plan to take out multiple college loans from different lenders, it is recommended that you consolidated your loan for easier payments.
Consolidating your loans can reduce your monthly costs because you only have to pay a single rate of interest. It also eliminates the confusion of beating different deadlines of payment. However, before signing up for consolidation, see to it that you only borrow the right amount of loan you need for your education.
As soon as you student loan is granted, utilize your funds wisely. If you can, try to pay off the interest rate of your loan while you’re still in college. By paying off your debts one step at a time, you can graduate with less amount of debts in your account.
About the Author
Samantha Wilson is a consultant for managing credit cards and finding the best student loans. For years she has written student credit card articles that helps build student credit, and student loan help articles that can be used as guides to handle student loan debt.