A college loan should be considered an investment in the future, since college graduates are more employable, and college graduates earn significantly more during their lifetime than high school graduates. Before choosing student or college loans, one should take into consideration all resources for funding this investment: savings, grants, scholarships, and federal and private student loans.
Students have many options for funding their education. Many different types of college loans are available for undergraduate students, graduate students, community college certificate and associate degree students, training or trade school students, distance learning students, and students in continuing education programs. The task is finding the right college loan that suits the needs of particular students. Students must weigh their options and consider time constraints, budget constraints, and personal needs.
Federal college loans come from private financial institutions. Federal loans have advantages over private loans. Students should seek out federal college loans before considering private college loans. Federal loans include Perkins, Stafford, Parent PLUS, and Graduate PLUS.
Stafford loans are the most common of college loans. They are fixed-rate, low interest, and available to full time or half time undergraduates in accredited schools. Perkins loans are low interest loans for undergraduate and graduate students with financial need. Parent PLUS is low interest for parents of undergraduate and dependent students. Graduate PLUS loans supplement graduate students.
Consolidation of college loans can save students (and their parents!) money, while in the process of repaying student loans. Consolidation loans combine eligible federal college loans into one, with a fixed interest rate and monthly payments. They can reduce loan payments and allow time for completion of a degree program and pursuit of a job.
Private college loans from schools and private institutions can furnish funding after federal loan possibilities have been exhausted. Private college loans can vary widely, and terms often depend on credit history. International students are also eligible for college loans through private institutions for pursuing an education outside the country.
All college loans have requirements and stipulations attached, and must be repaid following graduation, or termination of student status, with a six-month grace period.
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