Where to Get Student Loans?
Academic expenditures increases every now and then, hence, learning where to get student loans is highly necessary. In this context, it is strongly advised that both students and their parents know various means and ways to acquire financial aid. This is because most lending institutions both federal and private would require either a good credit score or any financial documents to support credibility to pay debts. You have to take this into serious considerations because these loans should be typically, paid 6 months after you or your child graduates. And with that being said, what are your options when it comes to student loans?
Student loans from government funding
Federal student loans are very popular today. This is the first option most parents and students take. It is primarily because of the low interest rates and the consolidation option it offers. Aside from that, with federal student loans, you may be able to choose from a variety of adjournment and compensation options.
There are four types of federal student loans namely Federal Stafford, Parent Plus, Graduate Plus and Perkins Loan. As of 2006, any of these federal student loans can be consolidated into one loan. As a result, your interest is reduced compared to paying several loans individually. The downside for this type of student loan is the fund limit. A classic example is for Stafford student loans. This entitles a dependent freshman student with a maximum amount of $3,500 if it is subsidized and $2,000 if it is unsubsidized. This is good for a whole school year. As you advance to higher year levels, the fund limit increases. Graduate student can get higher fund limits to as high as $12,500 for unsubsidized Stafford loan. As for other federal loans you can check federal student loan websites for specific details.
Student loans from private institutions
Where to get student loans if federal student loans dont suffice? Your next option would be to apply for private student loans. You can either opt for a bank or other types of lending businesses. Banks are mostly preferred because their interest rates are set by the government. There is a belief that federal loans have lower interest rates. But, with the rise of demand, most lending institutions have set lower interest rates to entice students to apply for the loan. The variation between them is the deferment and compensation options which are shortened compared to federal student loans.
The downside for private student loans is it cannot be consolidated. Cosigners are also necessary for higher chances of approval. Since, each private lending institution requires a good credit score and credit history either from the cosigner and the debtor. On the plus side, fund limit is higher compared to federal loans. Furthermore, most private lending institutions dont verify if you have utilized the money for academic purposes or for personal reasons. Unfortunately, this resulted to an average loan of $27,000 per graduate student. And most of them are clueless on how to repay their debts which is now the leading problem of the majority of fresh graduates.
Thus, it is highly recommended that although you have a long list of options where to get student loans, think about paying capabilities first before applying for one.