Plan a payoff for your school loans
Student loans can look like a veritable life sentence for some students as they begin their college career. For most, they are a necessary evil to furthering one’s education. There are two major categories for finding student loans, so discovering the important information about each will help you and your student choose the best option for your personal situation.
The most prevalent student loan programs are obtained from the federal government in one of four categories. The first, a Stafford Loan, is one the student obtains with his or her name, and the amount of the subsidized portion is determined by the individual need. These are federally backed loans from a private guarantor that will not begin repayment until the student has graduated, leaves school, or falls below half-time status. There are also some schools that will be able to offer a loan directly from the federal government without the need for a private guarantor.
The second category of federal student loans are called PLUS loans, which are secured in the name of the student’s parent or parents. These loans will require a credit check, but they do not hold the same standards as a typical consumer bank loan. The repayment period will begin immediately after the loan money is paid to the school. Similar to the Stafford Loan, some schools will be able to offer loans directly from the federal government, while others will require a bank or lending institution as a guarantor.
The third option for federal student loans applies to graduate students only. A Graduate Plus loan is secured in the student’s name, and can be applied for once the student has secured all the Stafford loan funding they are eligible to receive. These Graduate Plus loans also enter the repayment stage as soon as the funds are released from the lender. Be sure to ask the individual school you are attending about deferment options that may be available while you are taking at least a half time course load.
The final category of federal student loans is the consolidation loan that applies to students or parents that are currently repaying their loans. Parents may want to lower their repayment period, and get their interest rate fixed for the rest of the loan life.
The important thing to remember is that is the norm to need college loans and federal grants to pay for a college education. Most people cannot afford all the unending expenses for higher education these days, and with all the options available to borrow funding for college that is just a way of life. Consider it the means to an end, do your research, and make a payoff plan that is realistic enough to stick with!