Do I Need to Have Good Credit to Get Student Loans?
Can a Student Loan be Used for Outside Expenses as Well?
My Federal Student Loan Doesn’t Cover the Entire Cost of My Education
Can I Consolidate My Student Loans While I’m Still in School?
What is the best strategy for paying off a student loan with high interest?
I Have No Money to Continue My Education, is there Anyone to Help Me?
Should I Let My Student Loans Go to Collection?
What is Student Loan Consolidation?
When you decide to get a student loan there are two routes you can go. You can get a student loan from the government, referred to as a federal student loan, or you can go the private route. A private student loan is a loan you get from a financial institution or online. Choosing the right loan should be based on what suits you the best and how much you may need in your particular loan.
Federal student loans are a little more forgiving then their counterparts from the private sector. The Federal Family Education Loan Program (FFELP) is a part of the US Government. The FFELP financially backs all student loans and make them available through either your school or bank. Federal student loans usually have softer credit score requirements, more repayment options and lower interest rates. In order to apply for a student loan you complete the Free Application for Federal Student Aid, commonly known as FAFSA.
There are a few different types of federal student loans you can get. The Perkins loan is a loan for students that need financial aide. The interest rate is very low, 5%, and if you fall below half time status (less than 6 credits a semester) you can still collect on the loan. The Stafford loan is a student loan for everyone, you do not need to be in financial need just to receive it. The interest rate is fixed and you must be enrolled at least half time, if you fall below half time status your loan will become due. The Parent Loan for Undergraduate Students, PLUS, is a loan designed for parents of students. If you have child in college and you are paying for them, this might be the route to go. Repayment of these loans start while the student is in school, has a fixed interest rate, and is the only federal loan that requires you to at least have some good credit history.
If federal student loans are government run, have lower interest rates and lower credit score requirements; then why would you want a private student loan? A private student loan can do more. While a federal loan may not be able to cover all of your school costs, a private student loan sure can. With a private student loan you can borrow the entire cost of your tuition as well as help pay for living expenses, books, a computer or any other education expense you might incur. You also can skip filling out the FASFA, it is not needed for a private student loan. The drawback of a private student loan is that your credit score will be checked and will directly affect the interest rate you receive and the interest rate for a private student loan will most likely be higher then a federal student loan.
Whatever works best for you. If a federal student loan can cover your costs that is a smart idea, but if you need more money to cover tuition and other college expenses then a private student loan is what you need. When it is all said and done, a private student loan offers you a lot more options.
