Selecting the right higher education loans can help students meet their educational costs without incurring crippling debt. And, although it is not widely known, students in online degree programs may qualify for the same loans as students involved in traditional on-campus programs.
It's important for students to realize that making poor student loan choices can lead to significant frustration and expense . Here are a some tips to avoid both.
There are two student loan categories... subsidized and unsubsidized. The former loans are named as they are because their cost is partially subsidized by the federal government, which substantially reduces the interest payments. Students must demonstrate financial need, as determined by the FAFSA financial aid form to qualify for a subsidized loan. Subsidized loan totals are limited, and loan repayment typically starts six months after a student has left college.
Unsubsidized loans, however, are available to all students, regardless of their financial standing. Overall, unsubsidized loans are available for larger amounts than are those which are subsidized, and unsubsidized interest rates are somewhat higher.
Students who qualify for unsubsidized loans frequently need the subsidized loan maximum they are allowed. In addition, they may take out unsubsidized loans if they require further funds.
Students may apply for the Perkins or Stafford loan. Repayment begins after a student has been away from college for six months, whether or not he/she has graduated. The six month "grace period" is normally extended by the individual lenders.
Another option is a PLUS loan. It is also called a Parent Loan, because it is given to parents with solid credit histories. The PLUS loan, unlike the others, requires repayment to begin 60 days after the loan is actually awarded.
It is important to understand that student loans must be repaid. Dropping out of college or declaring bankruptcy, for instance, does not materially impact the repayment obligation. However, lenders do work with borrowers who contact them if they are facing economic difficulty. Those who avoid contact with lenders and fail to meet their obligations, conversely, may have their income tax refunds withheld or their salaries garnished.
Traditional college students and online college, students alike can benefit from the wise use of student loans. In fact, most students find that student loans...investments in themselves...are among the the best investment they make. But borrowers must remember two things. The first is that borrowing should be limited to cover the costs of educational necessities (not for luxury items). The second is that there are likely to be serious consequences if they do not repay their loans as agreed.
It's important for students to realize that making poor student loan choices can lead to significant frustration and expense . Here are a some tips to avoid both.
There are two student loan categories... subsidized and unsubsidized. The former loans are named as they are because their cost is partially subsidized by the federal government, which substantially reduces the interest payments. Students must demonstrate financial need, as determined by the FAFSA financial aid form to qualify for a subsidized loan. Subsidized loan totals are limited, and loan repayment typically starts six months after a student has left college.
Unsubsidized loans, however, are available to all students, regardless of their financial standing. Overall, unsubsidized loans are available for larger amounts than are those which are subsidized, and unsubsidized interest rates are somewhat higher.
Students who qualify for unsubsidized loans frequently need the subsidized loan maximum they are allowed. In addition, they may take out unsubsidized loans if they require further funds.
Students may apply for the Perkins or Stafford loan. Repayment begins after a student has been away from college for six months, whether or not he/she has graduated. The six month "grace period" is normally extended by the individual lenders.
Another option is a PLUS loan. It is also called a Parent Loan, because it is given to parents with solid credit histories. The PLUS loan, unlike the others, requires repayment to begin 60 days after the loan is actually awarded.
It is important to understand that student loans must be repaid. Dropping out of college or declaring bankruptcy, for instance, does not materially impact the repayment obligation. However, lenders do work with borrowers who contact them if they are facing economic difficulty. Those who avoid contact with lenders and fail to meet their obligations, conversely, may have their income tax refunds withheld or their salaries garnished.
Traditional college students and online college, students alike can benefit from the wise use of student loans. In fact, most students find that student loans...investments in themselves...are among the the best investment they make. But borrowers must remember two things. The first is that borrowing should be limited to cover the costs of educational necessities (not for luxury items). The second is that there are likely to be serious consequences if they do not repay their loans as agreed.
About the Author:
Marti Bloom is a writer, editor, and adjunct instructor at a New York State community college. She particularly enjoys writing about issues of importance to online college, online degree, and traditional college students.
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