Most students cannot wait to get to college. The freedom, the parties, and all the excitement surrounding the idea of not living at home with your parents are almost too much to handle. College, however, is much more than that. This is the time for you to discover your talents and build on your dreams. Post-college life will take anyone for surprise so be sure you use your time in college wisely.
Even before you enter college, you have to be prepared to make mature decisions pertaining to your college career. Picking the right type of financial aid is imperative. You do not want to obtain too little and have to work part-time to pay your bills. Though you may qualify for some aid, it may not be enough. On the other hand, perhaps you did not qualify for any grants, scholarships, or work-study; what do you do then? These days, a very large number of students use college student loans to pay some or all of their tuition and fees.
Types of College Student Loans
There are several types of student loans available, but only two will be discussed in this article: federal and alternative loans. They both provide the student with enough money to cover their tuition along with any amount left over from other financial aid sources.
Federal Subsidized and Unsubsidized Stafford Loans
With federal loans, you have two types of loan programs to choose from. The first type is called a Stafford loan. The subsidized Stafford loans help college students on a need-based eligibility. This means that students who are lacking partial or full tuition coverage can apply for this type of loan. You will not have to start repaying this loan until six months after you finish college. You will also not have to pay any interest that builds on the loan while you are in school. The government takes care of that until you graduate. The loan is usually low-interest and allows ample time for you to repay the money.
The unsubsidized student loan, however, is a little different. Students will have to pay the interest while they are in school, but can have their payments postponed until after school. Through this loan, students can qualify for the loan on a non-need basis. Maybe you need money for off campus living, extra expenses, books, or other fees unrelated to tuition. If so, these college student loans can help you with these other expenses.
Federal PLUS Loans
The word PLUS stands for (Parent Loans for Undergraduate Students). For these loans, you do not qualify based on your financial need. The way you obtain these loans is based on your parents’ credit history. Along with qualifying credit history, the student must also be a dependant of his or her parents. If you are independent of your parents, you will not qualify for this loan. Parents can borrow enough money to cover their child’s tuition and fees while receiving a low interest rate. The payments for this loan, however, cannot be postponed. Your parents must begin repaying immediately.
Alternative Loans
These are college student loans not obtained through the government. The lenders are usually banks, insurance companies, or other financial institutions that can afford to lend money to undergraduate students. The terms and rates for these loans vary from company to company. Usually, these loans require the student to be the borrower and the parents co-sign the loan. Most alternative loans do not require immediate repayment and have reasonably low interest rates.
As a general rule, make sure you thoroughly read the lender’s policies and rules before you make any commitments.
By Tamara C. Jude