Choosing the right college loan(s) will help students finance their education and avoid a bad experience when repayment becomes due. Failure to understand the rules and the options, on the other hand, can lead to unpleasant surprises and serious financial difficulties.
Student loans are separated into two categories; subsidized and unsubsidized. The chief difference between the categories is who is responsible for the interest during the time a student is actively enrolled in a college or university.
Subsidized student loans are available to students who demonstrate significant financial need. There is a ceiling on the amount of subsidized loan money students can borrow, however the government pays the interest on such loans while students are enrolled and during the first six months thereafter.
Unsubsidized loans are available to all students, regardless of financial need, and are available in larger amounts. However, students are responsible for the interest payments.
Generally, students who qualify for unsubsidized loans need the maximum they are allowed to borrow. If they require additional funds, unsubsidized loans are also available to them.
Students can apply for the Perkins Loan or the Stafford Loan. Payment on each begins after a student has graduated or has been away from college for six months. This six month "grace period" may be extended at the discretion of the individual lenders.
There is also the PLUS loan, which can be taken out by parents. The PLUS loan offers a relatively low interest rate, but requires repayment to begin sixty days after the loan is awarded.
Please be aware that student loans must be repaid, without exception. Even bankruptcy does not free borrowers of the obligation of full repayment. Generally, lenders will work with anyone making a good faith effort to repay their loans, but those who avoid contact with lenders or simply refuse to make payment may be subject to harsh penalties which including wage garnishment and the withholding of income tax refunds.
Students and their families should not fear student loans. They are a great way to help people get the education they need to have a meaningful career and earn far more than they would with only a high school diploma. But, it pays to shop for and fully understand your options and to avoid borrowing more tahn you really need. - 16747
Student loans are separated into two categories; subsidized and unsubsidized. The chief difference between the categories is who is responsible for the interest during the time a student is actively enrolled in a college or university.
Subsidized student loans are available to students who demonstrate significant financial need. There is a ceiling on the amount of subsidized loan money students can borrow, however the government pays the interest on such loans while students are enrolled and during the first six months thereafter.
Unsubsidized loans are available to all students, regardless of financial need, and are available in larger amounts. However, students are responsible for the interest payments.
Generally, students who qualify for unsubsidized loans need the maximum they are allowed to borrow. If they require additional funds, unsubsidized loans are also available to them.
Students can apply for the Perkins Loan or the Stafford Loan. Payment on each begins after a student has graduated or has been away from college for six months. This six month "grace period" may be extended at the discretion of the individual lenders.
There is also the PLUS loan, which can be taken out by parents. The PLUS loan offers a relatively low interest rate, but requires repayment to begin sixty days after the loan is awarded.
Please be aware that student loans must be repaid, without exception. Even bankruptcy does not free borrowers of the obligation of full repayment. Generally, lenders will work with anyone making a good faith effort to repay their loans, but those who avoid contact with lenders or simply refuse to make payment may be subject to harsh penalties which including wage garnishment and the withholding of income tax refunds.
Students and their families should not fear student loans. They are a great way to help people get the education they need to have a meaningful career and earn far more than they would with only a high school diploma. But, it pays to shop for and fully understand your options and to avoid borrowing more tahn you really need. - 16747
About the Author:
Janet Madden is the Director of Guidance at a large, urban high school. In addition to working with high school students, she advises adults in her school's evening programs on online colleges and accredited online degree programs.
