College Loans: What to Look For

Are you looking for college loans? If you’re considering a college degree, you’re making one of the most important decisions in your life concerning investments in your future. On average, a college graduate earns $1.5 million more over the lifetime of a career as opposed to a non-college graduate. Earning a college degree makes you much more marketable as a potential employee. Even when you're searching for employment outside your specific area of education, employers will often find you more attractive than they will someone with no education. Why is this? For one thing, completing a course of study proves that you have discipline and the ability to complete something. Also, since most courses of study include core classes, these skills are important in just about any job. For example, many employers value an employee who has sufficient written and/or oral communication skills. See why college and college loans are so important?

Can’t afford to attend college? Wrong! Don’t use that as an excuse. There’s plenty of money available for college loans. In fact, you can do a lot, if not all, of your college loan shopping and comparison without leaving home with student loans online. You can apply online for many types of college loans, including private college loans or a federal student loan.

What can college student loans be used for?

College student loans can be used for practically any expense involved with attending college. Of course, the first thing the college loans should pay is your tuition and books. Any needed college supplies should come next.

After these expenses have been paid for, you can use most college student loans to help pay for gas for your automobile, rent, and meals. If you have children, your loan for college can also be used to help pay for daycare that allows you to attend classes.

Mostcollege loans for students are pretty liberal in how they can be used, but not all are. Some student loans, however, will pay any college fees to your college first. If any money is left from these student loans after taking care of those expenses, you can use the money for other expenses.

Just be sure to keep in mind that loans for college are just that - for college. Almost all student loans will have to be repaid, and student loan interest on some college loans can be high. It's easy to over-extend yourself with student loans, so be careful. If you're not used to managing relatively large sums of money, ask a parent or other experienced adult for help. Sure, you might give up a little of your independence in doing so, but you'll be glad you did. It's very easy to "blow" money from loans for college students. You don't want to graduate and have to face an overwhelming amount of money that has to be repaid. A loan for college can be a wonderful tool. Just manage the money wisely!

Before the semester ever begins, make out a budget. If this is your first time on your own, ask a parent for help with budgeting your money. Someone who's familiar with paying bills and living expenses will have a much more realistic view of how much money you'll need each semester. It's also a good idea to have a parent or someone else with financial experience to compare student loans online with you. They might spot pitfalls and problems that you miss.

Federal student loans - Stafford Loan

The Stafford Loan is a federal student loan and is one of the most economical ways to pay for college. Acceptance is not based on your credit, and almost every student is eligible to receive a Stafford loan. Repayment does not begin until after you have graduated, and hopefully by this time, you have found gainful employment.

Stafford federal student loans for college can be either subsidized by the federal government, or unsubsidized. For a subsidized Stafford loan, you must show financial need. For an unsubsidized Stafford loan, you do not have to meet a financial needs requirement. The fixed rate for student loan interest of a subsidized Stafford loan starts at just 5.6%, while unsubsidized fixed rates begin at 6.8%.

Students who are listed as dependents on their parents’ tax returns can borrow up to $5,500 for their first year of student loans, up to $6,500 for their second year, and up to $7,500 for their third year and beyond.

Independent students can borrow up to $9,500 for their first college year, up to $10,500 for their second year, and up to $12,500 for their third year and beyond. Independent graduate students can borrow up to $20,500.

To begin the process, you’ll need to fill out a FAFSA. You can apply online for Stafford federal student loans online.

Federal Parent PLUS Loan

A parent PLUS loan is a loan made to parents or guardians to cover the cost of college, including books, tuition, housing, and other necessities. Parents have good credit to be approved for this loan. The interest rate is fixed, at 8.5%, and in many cases it’s tax deductible. Several repayment plans are offered. In case of financial hardship, a deferred payment option is provided. Parents can apply online.

Federal student loans - Perkins Loan

These are federal student loans through the U.S. Department of Education. Each college or university decides which students receive their Perkins federal student loans for college students, based on financial need. Students must be enrolled at least half-time in order to qualify, and loan limits are as high as $5,500 per year for undergraduate students, depending on the specific educational institution and availability. For graduate students, the limit is $8,000 per year, annually. You will not qualify for a Perkins loan if you’re in default of a Title IV education loan or if you have been overpaid from a grant. The Perkins federal student loan has a longer grace period for repayment than a Stafford loan has, and there are no loan fees involved with a Perkins loan. Student loan interest on a Perkins loan is 5%. To begin the process, you’ll have to complete a FAFSA. This is true of most student loans online.

Work-Study Program

With a work-study program, a student works off some or all of his college costs by being employed by the college he attends. Based on his skills and experience, he might work in the library, the cafeteria, the student center, or in another capacity. Students who are especially gifted in an academic discipline might serve as tutors for a specific department. With this program, you might not need a college loan.

Working for the college has another advantage, too. You'll get some job experience that could help you once you're in the job market. Your boss or supervisor can prove to be a valuable reference in the future when you seek employment after graduating.

Private College Loans

With most private college loans, the interest on the loan must be paid monthly as long as the student is attending college, along with the six-month period after graduation. After that, monthly payments on interest and principle begin. Student loan interest on private student loans can range from about 10% to over 15%, so it’s very important to compare college loans or education loans before signing on the dotted line. The most popular place to find private college loans is through Sallie Mae, but many institutions offer private college student loans.

If you have a good working relationship with a bank, you might be able to get a college loan or education loan there. CDs, savings accounts, and savings bonds can serve as collateral if the bank requires security for the loan for college.

Private Loans for Parents

Parents who need money for the college education of their children might want to check the rates and terms offered at their own bank. A second mortgage or a home equity loan often has lower interest rates than unsecured loans. Also, the interest on such an education loan is usually tax deductible.

Parents might also have enough real value in their life insurance policies to borrow against.

Forgivable Student College Loans

If you earn a degree in an area of demand and need, part or all of your student college loans may be forgiven. For example, in many states, if you earn a teaching degree and agree to teach for a specified time period in a particular county or in an area of need, your college loan might be forgiven. For several states, your period of required service is only one year. You'll still be paid a slaary, also. These college student loans are one of the best types!

Before you ever begin classes, you have homework to do! Compare and contrast the benefits and disadvantages of the different types of college loans, along with the individual lenders. Consider the interest rates, the life of the loan, the deferment period, and the maximum amount available. You might have to combine two or more loans to adequately meet your college loan needs. Be careful, however: It's easy to borrow today, but your college loan has to be repaid in the future, in most cases.