With university tuition on the rise, many parents find it difficult to put a child through four years of college all on their own. Financial aids such as scholarships, grants, and loans are being taken advantage of by more and more students every year, but most often students will need to take out a loan or two as well. Sometimes loans can be the easiest of these to attain. Not only can a student apply for federal loans, but there are also many lenders who offer similar services to families struggling to get their son or daughter through college.
Sallie Mae student loans and even many banks specialize in providing their own private loans and loan counseling. There are a number of loan programs out there, so the best thing to do is look over your options first before deciding on a loan.
Federal Direct student loans are probably the most popular government loan out there. The funds are provided from the government directly to you through your school. This loan falls into three categories: Stafford Loan, Parent Loan for Undergraduate Students (PLUS) and Consolidation Loans. Stafford loans are currently at an interest rate of 8.25 percent. This low interest loan can come in subsidized (no interest until graduation) or unsubsidized (interests accrues and must be paid by recipient) form. This loan is good for those who may not qualify for a private loans, such as Sallie Mae student loans. Applicants can be undergraduate or graduate students who show a need for financial aid and have filled out a FASFA form. Dependent undergraduates can borrow up to $2,625 freshman year, $3,500 sophomore year, and $5,500 each following year. Independent students can borrow an additional $4,000 unsubsidized amount the first two years (on top of the $2,625 the first year and $3,500 the second year) and $5,000 the following years (on top of the $5,500 dependent students receive). Graduate students can usually borrow $18,500 per year, although only $8,500 may be subsidized. The cumulative max for undergraduate and graduate students is $65,500 in subsidized loans and $138,500 in subsidized and unsubsidized combined.
Unlike Stafford Loans, PLUS loans are low-interest loans placed in the responsibility of the parents, not the students. Therefore, parents must pass a credit check and fill out an application from a private lender or the school. There is no real limit on the amount parents can borrow; they can use as much as they need to pay for school and costs that are not covered by financial aid.
Sallie Mae student loans are available to students, and can help take care of education costs beyond what government loans can cover. The same goes for banks as well. This does not mean you can borrow as much money as you want to provide for both school and a $5,000 shopping spree. Sallie Mae student loans work in conjunction with the financial aid you may already have in order to give you just the right amount of money to prevent you from going overboard. Both independent and dependant students are eligible for Sallie Mae student loans and other private loans. This process does not involve the school and can be done strictly between the student and the lender.
Before you sign any loan agreement, make sure you know the terms of the loan and are willing to take full responsibility for repayment of the loan. Remember, there is no such thing as free money when it comes to getting a loan, so take out only as much as you will need.
By Kelley Caner