To become part of the ‘American Dream’ it seems a first rate college education is a necessity. But sadly it’s an expensive necessity as tuition fees charged by universities and private colleges can reach more than $60,000 each year. Thankfully there are various student loan options available, and its worth noting tuition fees at public universities are generally lower!
What Type of Student Loans are Available?
There are two types of student loan for undergraduates:
This should be the first port of call for students as these are made by the U.S. Government directly. There are also federal loans made by other lenders including banks, and these are guaranteed by the Government. The interest on this type of loan is set at a fixed rate by the Government. All colleges and Universities should make this clear to students. Stay clear of those lenders who don’t carry government guarantees!
The ‘Stafford Loan’ of which there are two types is the most popular as these are available to everyone regardless of financial need. You can get them directly from the Government or through a lender. For those who can show sufficient financial need, the government will pay the interest on “subsidized” Stafford loans for individuals for as long as they stay enrolled at college. The flip side is loans accumulate interest while a student is in school. In this case the student can either pay the interest when it’s due or let it be added to the overall balance
A ‘Perkins Loan’ is available to those students who have need for the greatest financial assistance. ‘Federal Pell’ grants are given to students from low-income families. Parents can take out federal loans. These ‘Parental Loans’ are also known as ‘Plus Loans’. Check out ‘The Federal Education department’ Interest rates can range from five through to eight per cent so make sure you shop around!
There are lenders out there who will offer discounts on the loan after for example you’ve made a certain amount of consecutive payments on time.
The government sets limits on how much money students can borrow under each loan program. This ranges from $5,500 in the first year of study up to $7,500 in later years. The highest amount an undergraduate can borrow from the Stafford loan program is $31,000.
‘Federal Student Loans are also available through the William D. Ford Federal Direct Loan Program.’
In the case of Plus Loans a family can get enough money to cover their full period of attendance, less other financial help they receive. This cost of attendance is set by law and also includes boarding, transport and books.
These are similar to a personal loan you’d get from a bank except interest rates will be higher and will fluctuate over time. Citi student loans are one such example. Underwriting these loans can also be a problem as many students don’t have a credit history. These private student loans however, don’t carry the level of protection you get can from a federal loan. Temporary deferment or forbearance are terms used to explain under various circumstances a borrower won’t have to make payments on the loan.
Look at: how to cope with repayment difficulties for federal loan borrowers.
You should know student loans taken out privately are open to special treatment in the rare occurrence a student should go bankrupt. In this case they won’t incur a total debt amounting to more than the cost of attendance. Non co-signer student loans are available for students who have a good credit score, but it’s rare for students not to be given a private loan without a co-signer anyway. Take a look at the websites of both Wells and Citi for more information
Every U.S. student who wants to be considered for financial assistance must fill out the Free Application for Federal Student Aid form or a (FAFSA). Financial aid offices at educational institutions use the FAFSA to work out if you are eligible for grants, loans, and work-study programs. You MUST file one of these forms every year in order to be considered for financial aid. In truth it’s a long form so you’ll need to be patient, but it can also be completed online. The good news is by filling this form in you could save hundreds of dollars in the long run so it’s worth the effort.
For those hoping to go to college there’s a wealth of information on the internet for would be students – check out ‘SimpleTuition’ and ‘Graduate Leverage’. Some of these sites are paid referral fees by the lenders themselves so make sure you do plenty of research.
For more information it would be a good move to seek out The Institute for College Access and Success (www.ticas.org).
Everyone should be able to enjoy a good further education and there are student loans to suit every background. Don’t miss out – check out!!