For nearly all college loan options, from grants and scholarships to college loans and work study, your first step is to apply for financial aid via the FAFSA (Free Application for Federal Student Aid). Doing this will determine your financial need and eligibility – in other words which financial aid you qualify for, and how much you will need to borrow. No matter what your financial situation (unless you are super rich, that is), there is a good chance a portion of your education will be financed by a college loans. As a matter of fact, according to the National Postsecondary Student Aid Study (NPSAS), about two-thirds (65.7%) of seniors graduating from a four year degree program do so with some college loan debt, averaging close to $20,000 worth!

So now would be a good time to school yourself on the college loan lowdown, huh? Here is a breakdown of college loan types just to get you started.

Need Based College Loans: Provide proof you need it and it could be yours.

Federal Perkins Loan: These are the best college loans for students since interest rates are quite low (currently 5 percent), however, they also have the most stringent income qualifications.

Federal Stafford College Loan (Subsidized): These Stafford College loans are ideal since interest rates are low, (they vary each year but cannot and will not exceed 8.25 percent). In addition, interest does not begin to accrue for six months after you leave school (as a graduate or otherwise) since the government will waive the interest bill on your behalf. Guidelines allow you to borrow between $3,500 to $8,500 per year, depending on your grade level.

State College Loans: State sponsored college loans and their terms vary. Research what your home state is offering, and if you plan to attend college in another state, you might qualify by apply there as well.

Non-Need Based College Loans – Extra cash can help for anyone who needs or wants it.

Federal Stafford Loans (Unsubsidized): Similar to the subsidized, except interest begins to accrue as soon as the college loan is disbursed – and Uncle Sam will not help you. However, students can choose to make the interest payments during college or defer them until six months after they have left school. The maximum amount a student can borrowed is $3,500 to $20,500 (less any subsidized amounts received for the same period), depending on there grade level and dependency status.

PLUS College Loan (Parent Loans for Undergraduate Students): Parents can borrow up to the annual cost of attendance. New rates are set each July but will not exceed nine percent. Repayment usually begins 60 days after the college loan is disbursed.

Private College Loans: Organizations such as lending institutions and banking institutions offer private college loans. These are often used to bridge a gap, provide a cushion for living expenses and other things not paid for by financial aid. Rates, repayment plans, and borrowing limits can vary, so be sure to do all your homework and read all the fine print. Private student loans are credit based, as are student credit cards. When considering credit cards, look for student credit cards low apr offers as the lower the apr the more will be saved in interest rates.

This entry was posted on Friday, May 30th, 2008 at 11:50 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.