Student Loans

STUDENT LOANS: FEDERAL LOANS

May 20th, 2008 | by vrao |

The very first thing you need to take care of while looking for financial aids is that you are not entitled to pay back. This can be done by looking for grants, fellowships and scholarships. Look for fellowships at the institution where you’ll be the student. Search for scholarships online. But if all these measures aren’t enough then go for student loans. Your first priority should be federal loans, these offer great repayment terms and usually low interest rates than the non federal loans. As stated, there are broadly three kinds of federal loans available:

Perkins loan: This kind of loan is for low income students hence based greatly on financial need. These are offered through the school you are entitled to enter. The schools have limited amount of dollars to lend.

Stafford loans: Stafford loans are of two types in terms of interest i.e. subsidized and unsubsidized. For subsidized loans you pay the interest after you complete your studies, till then the bank pays for your interest. For unsubsidized one you are entitled to pay the interest while studying.

PLUS loans: PLUS loans have a fixed interest rate, you must have no adverse credit, i.e. your credit report must not show any negative records such bankruptcy, unpaid debts, having a tax lien, etc. In case of interest rate, many lenders will offer you discounts so it is a great option if you need more money and have crossed the Stafford limit.

Since almost every lender will allow you some discount in case of Stafford and PLUS loans to make you his or her customer hence one should be aware of the different interest rates available in the market and compare them to benefit yourself. You must choose the most affordable loan for yourself and be very clear with the terms involved.