Taking out the best college loan(s) can help students finance their higher education while ensuring that they will avoid a bad experience when repayment begins. Failure to thoroughly investigate and consider the responsibilities which go with loans may, however, spawn unpleasant surprises. The more information you get, the more likely you are to make good loan choices.
Two kinds of loans are available to students, subsidized and unsubsidized.
Subsidized student loans are limited to students who demonstrate financial need: students whose incomes are not sufficient to meet college costs. There is a fixed limit on the subsidized loan money students may borrow, but the government pays the interest on such loans while students are enrolled in college and during the first six months thereafter.
Unsubsidized loans are available to all students, regardless of financial need, and are available in far larger amounts. But, students, not the federal government, assume responsibility for the interest payments.
Almost always, college students who are eligible to receive unsubsidized loans need the full amount they are allowed to borrow. If they need more than that limit, they can take out unsubsidized loans as well.
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.
Even bankruptcy does not free students of the obligation to repay student loans. Lenders will virtually always work with people making a sincere effort to repay their loans, but those who attempt to evade their responsibilities and obligations are subject to wage garnishment and other serious penalties.
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 than you really need.
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.
Article posted to Precious Metals ArticlesSource: http://financialaidarticles.com/2011/10/everything-you-need-to-know-about-student-loans/
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