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Student Loans to Consider

Student loans are increasingly critical to getting an education. Scholarships, grants and work-study funds -- all of the sources of funding that don’t require repayment -- are falling victim to the cuts made to our educational system. This at the same time as tuition rates are increasing to try and make up for cuts. And unfortunately, the need for an education is becoming ever more evident in the work world.

Student loans offered through federal programs are sometimes the only way for even a good student to attend school. They may be vital to someone wanting to attend a trade, business or other specialized educational program needed to get ahead in life. They are generally a good investment, providing a far higher return than they require in repayment, but it is important to get the best rate and repayment terms possible.

There are several steps to take when applying for a student loan. It is preferable to at least have an idea as to which school or schools the student will be applying. This is not crucial, but when the next step is taken, information will automatically be sent to those schools, which is vital to determining whether financial aid will be given in any form by the school. Some schools will even automatically apply for a loan for the student using the form mentioned in the next paragraph. The second step is to fill out the FAFSA (Free Application for Federal Student Aid.) This can easily be done online.

If the student’s parents are providing the student with money, their income data will need to go on this form as well as the student’s personal assets. This form will calculate how much aid the student qualifies for, if any, and will also determine which type of government loan the student is qualified for. There are two types: subsidized and unsubsidized.

A subsidized loan is the best type to have, as the federal government pays the interest on these loans until about 6 months after the student stops attending school. If the income level is too high for this, the borrower may still qualify for an unsubsidized loan, where the interest needs to be paid as the student goes along.

Even an unsubsidized loan through the government is generally preferable to any other loan form for schooling. These loans are generally easier to get, being solely income-based. They also automatically offer the lowest interest rate possible, which is locked in for the term of that loan. Finally, while this type requires interest payments while the student is in school, a private loan may be harder to get and require repayment on the principle of the loan while the student is in school.