Steadily increasing tuition fees force students to apply for college student loans to finance their dreams of a higher education. $55 million a year in college student loan aid is awarded to help struggling students survive the extravagant costs of college.
Student loans come in three categories: federal, private and institutional. Your specific needs and income level determine which college student loan is right for you. Here is a brief outline of each type of loan available.
A private college student loan is provided by banks and individual loan companies. Each private student loan provider determines its own loan eligibility requirements and terms. Sallie Mae and Citibank offer excellent private college student loan services. It’s a good idea to shop around for a private student loan provider that offer payment deferments while you are in school, a high credit approval ratings, and flexible repayment options.
Institutional college student loans are available at individual universities. Each college has it own set of specific terms and requirements. You need to check with the financial aid office at the college you plan on attending and inquire about student loan requirements and deadlines.
Federal college student loans are by far the most popular form of loans students apply for. There are many types of Federal student loans, they are a primary source of funding for students who need financial aid.
Perkins Student Loans are available to students in extreme financial hardship situations. They offer a low fixed interest rate of just 5%, and are available on a first come first serve basis. Perkins college student loan payments are scheduled over a 10 year period and can be discharged or canceled in full or in part under certain circumstances.
Stafford Student Loans are the primary source of federal aid for qualifying students. Stafford college loans provide lower interest rates than a private loan or alternative student loan carries, but slightly higher than the Perkins loan rate. Stafford loans are available to students enrolled in school at least half-time and have a variable interest rate that is adjusted every 12 months.
A Stafford college student loan may be subsidized or nonsubsidized. A subsidized Stafford loan is based on the economic needs of the student, and the government pays all interest fees for you while you are attending classes. Students are only required to begin making payments on loan interest and principal six months after they graduate.
Students who don’t show enough financial need according to the federal guidelines, but still require a loan to pay tuition fees, may qualify for an unsubsidized Stafford college student loan. This type of loan doesn’t give you the interest rate grace period. You are required to pay interest charges on the date the loan is dispersed. Students are allowed to take up to 30 years to pay off a Stafford College Student Loan depending upon how much you owe and the type of repayment plan you choose.
Federal loans have lenient repayment plans, low interest rates and no application fees. Although finding your way through all the red tape to qualify for federal student loans can be tricky at times, it is well worth the effort.
The first thing you need to do to apply for a government student loan, is fill out and send in your Free Application for Federal Student Aid Form. This is an imperative first step toward qualifying for the funding you need to finance your higher education. Download your College Student Loan Application and get started.
This is a look at just a couple of financial aid options available for students who need help with college tuition, there are more than 5 different types of Stafford College Loan Funding options available, and many more federal student loan programs I haven’t had the opportunity to tell you about yet.