Student Loans

Obtaining a student loan is a very popular way of paying for the cost of higher education. It is very appealing to not have to be concerned with paying back the expenses incurred to go to college until after you have earned your degree and are working earning a salary.  It is vitally important to calculate your finances before applying for a loan so that you can get the proper funding.

Private student loans usually offer lower interest rates.  They are a little higher than government loan rates, much still much lower than interest rates for other private loans.  Private loans are an option when grants, scholarships, or federal loans are not enough to cover tuition, books, and living expenses.  Interest on private loans begins accruing the moment you sign the paper, so private loans should be your last resort.

Unsecured student loans have higher interest rates than normal student loans.  However, the lender is taking a larger risk in lending you the money, so it is to be expected that the interest rate would be higher. 

Government student loans or Federal student loans are guaranteed by the United States Government.  Most student loans are actually guaranteed by the federal government; however, few are issues by the government.  Government student loans are given directly to the student.  The government offers subsidized and unsubsidized student loans.  Keep in mind that if you apply to jobs in certain areas that the government has special interest, your debt can possibly be reduced.  Some state governments and federal agencies will forgive student loans when they take a job in certain careers.  Government student loans are referred to as Federal Student Loans, Federal Direct Student Loans or Federal Family Education Loans.

Often times, student loans can be deferred for six months after graduation while you are looking for employment.  After that, many different repayment options are usually available so that you can adjust your payments to your actual income.

When beginning the application process, don’t just walk into your university’s financial aid office and fill out their generic form.  Ask a few questions first.  You must know what loan you are applying for.  Ask specifically about Perkins loans.  They traditionally offer the lowest interest rates.  There are usually loans available for specific fields of study.  Remember, you have to ask all these questions when you go into the financial aid office.  Do not assume that all the information you need to secure the best loan option for you will be given.  You need to do your homework before you begin applying for student loans.