Student Loans: Federal Programs Vs Private Loans

According to a study, those students who have done their college schooling are more relaxed & satisfied compared to those who do not have college degrees. In spite of the fact that plenty of students must settle their education debts with debt consolidation loans later, a college degree has become a necessity for the students. Moreover, it is a gateway to the professional life & it is widely known that without higher schooling, the scholars are less likely to get nice jobs in future. Although strange that it may sound, a study reveals that college students live longer than their high school counterparts! The federal government has plenty of loan offers. Let us at first review the offers that are available at the federal level:


� Parent And loans: This loan is different than the other loans which are offered by the government. Under this section, the parents are provided with the loans in lieu of the scholars. The application method is similar to that of a traditional bank loan; the loans are approved on the basis of the credit score. These loans can be utilized for the tutoring fees & other expenses such as books & supplies.

� Unsubsidized Stafford loans: These loans are provided to all students irrespective of their financial needs. Unlike the subsidized section, the interest on this loan option remains as unpaid until the scholars are out of college & repay the same.

� Subsidized Stafford loans: These loans are provided to the scholars on the basis of their financial priorities. Under this section, the scholars who belong to low income groups are thought about before others. The government is responsible for paying the interest on the loans until the scholars are out of college.

However, the eligibility of private loans will be contingent on the credit scores in all of cases. On the other hand, the terms of the government loans are much better than the private ones; that is why the private loan options ought to be taken in to account only when the other options are exhausted. While the rates of interest on the federal loans stay fixed, for the private loans it will keep varying; but with private loans will have such offers as a deferred repayment which a federal loan does not have.

However, it is unheard of, except for isolated cases, that the government student loans are not sufficient to cover the immense costs of college education. This is the exact reason for the scholars to also look for private loans in order to fund their studies. The private loans can actually act as a bond between the high costs of the college schooling & the limited amount that the government loans offer. Although the private loans are costlier than the government loans, they have flexible repayment offers which are convenient for the scholars.

Therefore, the students & their parents resort to private loan options only when the federal offers are not to cover the costs. While the rules of the federal loans are far more relaxed, the private loans can help the scholars by providing 100% coverage for their college schooling.

Parent Loans or Student Loans? What is Going to be Best for My Child?

Parent Loans or Student Loan? What is going to be best for my child?

At least 20% of college students need some type of loan to help pay for their college education. Such a statistic could lead to students graduating with an unmanageable debt load. An alternative is for parents to help out by taking out loans themselves. Nevertheless which is the better option? Student loans or parent loans? Each has distinct advantages and uses.

Federal student loans

Federal student loans have the lowest interest rates and best repayment options. If you need to take out loans and you qualify for federal loans, this is your best choice. Just be sure to accept only the funds you need, even if you are offered much more. Parents can always help their children pay off these loans once repayment begins after graduation.

Federal parent loans

PLUS Loans (Parent Loan for Undergraduate Students) are another loan option that comes with low interest rates. If you are a parent with dependant students attending college at least part-time and you have a good credit history, you are eligible to receive a PLUS Loan. These loans not needs-based. You can borrow up to the total cost of undergraduate education expenses, minus other financial aid already received. Unlike federal student loans, payment is not deferred until after graduation; instead, your first loan payment will be due about 60 days after the loan is disbursed. Also unlike federal student loans, PLUS Loans require an application fee.

Private loans
Both students and parents can take out private loans to cover funding gaps. Terms are basically the same for these loans, although students may be able to have their repayment deferred until after graduation. Another consideration is the students may wish to take out small loans to begin to establish a credit history. You may need to cosign for private student loans.
Other options

Parents do have some additional options for college funding, such as home equity loans. These often have rates as good as private loans.

So which type of loan should I get?
This really comes down to a personal decision. Ask yourself these questions as you are trying to decide:
- What level of debt do you feel is manageable for your child to graduate with?
- How important is it to you that your child takes responsibility for paying student loans?
- Will you and your child work out a repayment plan to repay PLUS Loans and other parent loans?
My goal is to help every student succeed - education is one of hte most important things a person can have, so I have made it my personal mission to help every student pay for their education. Aside from that, I am just a pretty average girl from SD.