An education beyond your high school is a huge investment into your future. It will be expensive and will often requires you or your family to take out many college student loans to help pay for it.

College student loans will generally fall into two categories, federal college student loans and private college student loans.

A federal college student loan is backed by the federal government and falls under the Federal Financial Aid Program and can only be obtained by filling out and submitting the FASFA application. You can do this online or obtain a paper copy if needed by the financial aid office of your school.

The many types of college student loans and grants that are offered through the federal financial aid program can be need based as well as non need based. Most people will find that they can qualify for one or more of the different loan programs offered through them. The benefits of a federal financial aid college student loan are many. The interest rate is usually fixed at a very low rate (6-8.5%) and will not have to be paid back until 6-9 month after you have graduated or dropped less than half time student; depending on the particular college student loan you have been awarded.

For the reasons above, it is always suggested this be the first step you take to obtain financing for your college education. At this point, if you find you are still in need of additional funds you will probably need to start looking into a private or alternative college student loan.

A private or alternative college student loan are one in the same. Depending on the lender as to what it is called. For this purpose we will refer to it as a private college student loan. This type of student loan is not backed by the federal government and has to be obtained by a bank or financial institution. They will run a credit check unlike the federal financial aid college student loan program and determine you interest rate, terms and conditions on this factor.

Unfortunately, many college students will find they have simply not obtained the credit history they are looking for and will be asked to find a co-signer or co-borrower. Also one in the same depending on the financial institution. This can be a family member such as a parent or a friend. The only criteria is to be credit worthy. The better there credit the better your interest rate will be. However, you must realize you interest rate will never be as low as that of a federal financial aid loan. It will probably start out with excellent credit, any where from 10-12%. This is a big difference and will make a huge difference in your payments once you start to repay the loan.

There can also be many fees attached to the loan you would not have with the federal financial aid loan as well as a big difference in the pay back terms. Depending on the loan and terms you may be required to start the repayment process as soon as the first disbursement happens. This would be while you are in school. If you are not working and attending school full time it could be a very difficult process.

There are many different options available to you. What you need to do is research your options and chose the college student loan that best fits in with your financial situation.

This entry was posted on Monday, January 5th, 2009 at 4:18 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.