Financing Your Education
Student Loan Advice
And Information
by Brad Stroh
For many students, the dream of getting a higher education
just isn't possible without the financial aid of a
student loan. Fortunately, there are many opportunities
out there to apply for and receive a student loan.
And even better, http://bills.com is here to give
you all the knowledge you need to choose the best
student loan for you.
Student loans generally come from two sources: the
federal government and private financial institutions,
such as banks. Both require repayment of the loan,
but that's where the similarities end. Let's take
a look at both federal and private student loans.
Federal student loans are sponsored by the government
and account for the biggest chunk of education loans.
There are three main federal loan programs: The Perkins
Loan, The Stafford Loan, and The Parent Loan For Undergraduate
Students, also known as PLUS.
The Perkins Loan is the most affordable student loan,
with an interest rate of 5% and low fees. But it's
also the hardest to get because it's only given to
those who need it the most. And the loan limit, at
$4000, is the lowest of all three federal student
loans.
The Stafford Loan comes with a variable interest rate
that's higher than the Perkins, but lower than the
PLUS Loan, due to the cap at 8.25%. As with the Perkins
Loan, this student loan does not hold credit worthiness
against the applicant. The Stafford Loan also has
a much higher loan limit and is offered to both graduate
and undergraduate students.
Compared to the Perkins and Stafford Student Loans,
which are borrowed in the student's name, the PLUS
Loan is completely different in that it is a loan
for parents of dependent undergraduate students. A
big advantage of this type of student loan is that
it covers any remaining balance not covered by other
forms of aid - in essence the loan limit covers your
entire educational expense.
Now that we've familiarized ourselves with the different
types of federal student loans, let's identify the
attributes of a private student loan. This is a loan
from a financial institution that takes into account
your creditworthiness, not your need for aid. Your
credit is reviewed by lenders and if approved, you
can get a substantial size student loan in minutes,
sometimes up to $30,000. A downside to private student
loans is that repayment terms typically cap at 15
years, compared to 30 years for a federal loan. Also,
if you become disabled or deceased, your heirs are
required to payoff your student loan, whereas in a
federal loan, the loan is forgiven, making repayment
unnecessary.
As you can see, you have several choices when it comes
to student loans. Making sure you choose the best
option is a matter of getting informed on these choices,
and picking to student loan that best fits your needs.
About the Author
Brad Stroh is currently co-CEO
of Freedom Financial Network and Bills.com.
If you would like more of Brad's
articles, please visit the Bills.com information
on Loans. |
