Best College Loans For Students

Federal Direct Student Loan:

The federal government offers direct student loans that work well for students who have good credit and little-to-no debt. These loans are offered by the US Department of Education. While they do have their drawbacks, they do offer low interest rates and flexible repayment options. The amount borrowed is determined based upon financial need. To apply for a loan, you’ll need to complete FAFSA (Free Application for Federal Student Aid). You may qualify if your family income falls below $65,000 per year and/or your assets total less than $50,000. In order to receive the maximum possible award, you’ll likely want to apply early since funds tend to fill up fast. If you don’t get accepted, you may want to consider some alternative programs.

Federal Perkins Student loan:

These loans were created to help students attend vocational schools and improve employment prospects after graduation. As long as you meet certain requirements, you could qualify for these types of loans. Generally speaking, the program caps out at about $10,000. After paying back a percentage of your loan each semester, you eventually pay off the full balance. Interest does not accrue until the end of the grace period, at which point you begin making payments. Your eligibility for the loan will depend upon several factors, including how much money you make, whether or not you already have student loans, and your school choice. Depending on your situation, you might get a lower rate due to having bad credit.

Private student loans:

You may be able to borrow money privately to cover educational expenses. Private lending institutions charge higher interest rates, however, so you should plan accordingly. Many private lenders require you to put down 20% to 30% of the loan amount. You may be given collateral like a car  before approval. Once again, you’ll want to ensure you can afford to repay the loan. Most borrowers have trouble repaying larger sums of money over time. Because of this, it’s best to choose a lender wisely.

Parental PLUS Loans:

If your parents co-sign your loan with them and agree to take responsibility for any unpaid balances, you could qualify for PLUS loans. Like private loans, parental PLUS loans provide higher interest rates and often require a personal guarantee. However, unlike private loans, PLUS loans allow you to borrow more than what would be covered under federal financial aid. Parents need to submit documentation proving their child meets the above criteria and the parent is responsible for repaying the loan. If their income exceeds a certain limit, they may face tax penalties.

State Grants:

Your state funding may be available to assist with college costs. Check with your local department of education to learn more about state grants.

Best College Loans For Students

Student Loan Debt

The average student loan debt is $37,000 after two years. However, it can increase if they don’t pay back their loans on time. Student loans have become increasingly difficult to manage and students are often unable to afford making payments. In fact, over one third of student borrowers who took out private loans said that they skipped at least one payment.

College Funding

There are many different types of loans for college and each type comes with its own set of pros and cons. Each type of loan may require a different repayment plan; therefore the best way to choose the right loan is to understand how it works and what its requirements are. There are several types of educational financing options available today including subsidized Stafford loans, unsubsidized Stafford loans, Perkins loans, PLUS loans, Federal Parental Loans, Private Alternative Loans (PAL), and Direct Subsidized/Unsubsidized Loans. We have put together a quick guide describing these five loan types explained below.

Subsidized Stafford Loans

A subsidized loan is a loan where the government pays some of the interest while the borrower attends school. The amount of money that the federal government covers varies depending on income level. It starts out at approximately 0% and increases as income rises. As long as the borrower makes 120% of the federal poverty line, they typically won’t pay any interest. Unfortunately, these loans only last as long as the borrower is enrolled full-time. After graduation, the balance becomes due immediately.

Unsubsidized Stafford Loans

An unsubsidized Stafford loan is similar to a subsidized loan except that the interest rate isn’t covered by the government instead it must be paid off by the borrower. The interest rate is fixed and will likely not change much throughout the life of the loan. There are no income limits as long as the borrower has enough income to cover the costs of attending school. However, unlike subsidized Stafford loans, there is no grace period and the entire loan must be repaid at once.

Perkins Loans

This type of loan is funded by the Department of Education and is designed to help low-income families pay for postsecondary education. Perkin’s loans allow eligible parents to borrow money at a lower interest rate than regular Stafford loans. Their maximum annual limit is capped at $23,000 per year per parent. If the family exceeds this cap, they will need to take out a higher priced loan.

PLUS Loans

These loans were created specifically for undergraduate students who want to attend public colleges and universities. The US government provides funding for them via Pell Grants as well as providing funds directly to lenders. The maximum amount that can be borrowed is capped at $20,500.00 annually. Like Perkins loans, there is a yearly cap. If the family exceeds the cap, they might be forced to go onto a pricier PLUS loan.

Private Alternative Loans

As mentioned before, alternative loans are non-federal loans provided by banks, credit unions and online lenders. Unlike federal loans, these loans are not guaranteed by the federal government and aren’t regulated by the Department of Education. However, they still follow the same guidelines outlined above.

Best College Loans For Students

Federal Student Loan

Federal student loans are the most popular type of loan out there today. If you have applied for the federal student loan before, then you know how much they can help you pay off over time. However, if you are looking into these types of loans, you need to make sure you do enough research about them first. One mistake could cost you thousands of dollars.

Direct Subsidized Loan

This type of loan is generally only given to students who meet certain income requirements. Then, you go direct to the government website to apply. Your money should be deposited directly into your bank account after you are accepted. Students must make payments based on their financial situation, plus interest, for between ten to thirty years depending on which loan program you are applying for.

Private Education Loan

These loans are great for people who don’t qualify for federal loans. You fill out the application yourself, and many private companies offer great deals. Most lenders charge between 6% and 18%, but some may extend as high as 24%. When you are ready to renew your loan, you just contact the lender directly and set up a payment plan.

Perkins Loan

Perkins loan works differently than most other forms of college loans, since most schools don’t give money directly to students. Instead, most schools get funds from banks, corporations, and even wealthy alumni. In order to receive this type of loan, you must fulfill certain conditions. First, you cannot already have a federal loan. Second, you must show proof that you have been accepted to the school of your choice. Third, you must prove that you can cover at least half of your tuition costs per year. Fourth, you must provide evidence that you have saved money for your education. Finally, you must be employed throughout the duration of the loan.

Parent Loans

If you have parents who can afford to contribute toward your education, then this is what you should use. Because of federal laws, you must graduate from high school or go to GED classes before you can apply. After that, you need to wait until you turn eighteen. Once you are older, you can start filling out the paperwork to get a parent to co-sign your loan. There are many things that come along with this process, including making sure that your parents can handle the amount of money that you are requesting.

Scholarships

Scholarships are a great way to save cash on your college education without having to break the bank in the process. Many scholarships require no documentation and are awarded automatically for certain reasons, such as outstanding grades or involvement with community service. Others require that you submit documents proving that you meet specific criteria. Scholarship applications can take anywhere from three days to two weeks to complete, so prepare well ahead of time.

Work Study Programs

Work study programs allow students to work while enrolled in college. These jobs aren’t always related to your degree, but instead might be around campus or something you can do remotely. Check with your college or university to find out what kinds of positions are offered.

Best College Loans For Students

Federal Direct Stafford Loan

This type of loan is offered through the federal government and is the best college loans for students. You don’t have to pay interest while you’re enrolled in school, so this is the best student loan if you want to attend any public school. You’ll need to complete FAFSA (Free Application for Financial Aid) each year though, and you should file early since some grants require you to file paperwork each semester until graduation. Filing early makes sure that you get enough money before you start paying back the loan. Don’t forget to check with the financial aid office at your school for any other scholarships you may qualify for.

Federal Perkins Loan

This loan is given out by the federal government specifically for people pursuing post-secondary education. Like federal direct loans, you won’t have to pay back the interest while you’re enrolled, but you will need to begin repaying it after you graduate, and you have six months to do so. You will need to fill out the Free Application for Student Aid (FASA) along with your federal income tax return each year.

Private Education Loans

These types of loans vary from lender to lender, just like with credit card companies. Keep in mind that these lenders work with banks to offer their services so they take a small percentage of the total amount borrowed. You’ll probably end up taking out a higher rate than what’s listed on the website because the bigger company gives bigger discounts. If you’re looking for private college loans to help fund your degree then you need to compare rates, terms, and conditions between lenders so you can choose the best option. One thing to remember though is that getting approved for a private loan means you’ll likely pay a lot more money in fees.

Parent PLUS Loan

If you already have student loans, you might be able to use them again. By using your own existing balance as collateral, you can apply for a parent PLUS loan which will give you cash right away. The bad news is that you’ll pay interest on top of the original principal. Let us know how this works for you.

Best College Loans For Students

Federal Direct Student Loan

Federal direct student loans are backed by federal government and have some of the best rates out of any loan program. In 2019, college graduates received between $2300-3700 per year depending on their major and school. The government offers two types of loan programs; subsidized and unsubsidized. Subsidized loans are given to students who demonstrate financial need. These loans have fixed interest rates while unsubsidized loans do not have fixed interest rates. However, unsubsidized loans require 20% down payment while subsidized loans require 10%.

Perkins Loan

The Perkins Loan Program was created under President Franklin D. Roosevelt’s New Deal. Perkins Loans were intended for undergraduate education only, therefore they are geared towards students attending community colleges or trade schools. A student may receive up to $10,000 for each academic year. Interest rates for Perkins Loans vary by borrower’s income level (higher incomes have higher interest rates). Perkins loans are not guaranteed by the federal government and may potentially have variable interest rates. There is no minimum credit score requirement and private lenders can issue these loans.

Stafford Loan

Stafford Loans are federally funded by the US Department of Education, so borrowers have access to them regardless of their state of residence. Stafford Loans are not based on financial need and they can carry fixed interest rates. Borrowers must maintain a minimum grade point average to remain eligible for these loans. A student can borrow up to $20,500 per year. Private banks offer Stafford Loans and often have lower interest rates than the government does.

Parent PLUS Loan

Parents who take out PLUS Loans are those whose children attend postsecondary institutions. Parents can use these loans to finance the cost associated with the child’s education. They cannot borrow money for themselves, however, and the amount borrowed is limited to the value of the tuition. The maximum annual borrowing limit is $57,500, although many schools set an even larger cap. This loan is non-refundable once it is spent. If the loan goes unpaid after a certain number of months, the parent could lose their home and face tax penalties.

William D. Ford Direct Loan

Direct loans are popular with both high school and college aged students. These loans are offered directly by the federal government and are considered the easiest type of student loan to obtain. Eligibility requirements are minimal, and borrowers must maintain at least half time enrollment to qualify. The maximum loan amount is $31,000. Borrowers who fail to complete their studies before graduating may end up paying much higher interest rate, defaulting on the loan altogether.

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