There are various options for students who need financial assistance in order to attend college. Scholarships and grants are the two most common ways to help you afford college education. But if you do not qualify for scholarships and grants, student loans might just be your next line of option. The two main categories available are federal and private loans, reflecting your source of the funding. Under each category are several different loan types. By knowing what is available, you can make the right choice for your unique needs.
Federal or the public loans are government funded loans that usually come as part of a financial aid package. You have a lot of options when you qualify for a federal student loan. The Stafford Loan is subsidized by the government which is made available to students who can present a significant need for money as determined by the FAFSA. This loan is offered through a traditional lender, but at the same time offers flexible repayment options. The package gives you a generous grace period for repayment after graduation with no prepayment penalty.
Another federal student loan options are the Perkins Loan and the PLUS loan program. Like the Stafford Loan, the Perkins Loan is offered to students who have a great need for money to fund the cost of education. When you are granted with the Perkins Loan, you are given a generous grace period to re-pay the amount borrowed. On the other hand, the PLUS loan program is made available both to parents of undergraduate students, and graduate students. The loan is granted based on the family’s income and their ability to contribute to the student’s education. Another benefit of this loan option is its low interest rate, a similar benefit of the Perkins Loan.
Private loans, as the name implies, are issued by private sources. Unlike federal loans, privately funded loans typically have higher interest rates and offer less flexible terms of payment. Apparently, you need to have a good credit history to be considered eligible for this type of loan. Moreover, some lenders might have to check your credit score. This can be a challenge especially that most college students do not have much of a credit history. The Signature Student Loan offers students a competitive interest rate that is based on credit history. But if your credit history is not good, you might still qualify by having a good consigner. This will boost your credit-worthiness for this type of loan.
The Career Training Loan offered by Sallie Mae caters students who are looking to attend a technical or trade school. Borrowers with good credit history can benefit from the loan, as it has no prepayment penalty and offers flexible repayment terms. Unlike most loans, the Career Training Loan can be used to shoulder non-tuition education expenses, as well as payment towards non-traditional education such as online courses.