When it comes to student loans there are a number of options for you to consider. A variety of products exists in the student loan marketplace, both public and private. The US Dept of Education offers Federal Family Education Loans (FEEL) or Direct Loans, which include Stafford Loans for students and PLUS loans for parents or graduate level students. You might be wondering the same thing I was when I first read about these options, “what is the difference?”. Simply put, FEEL loans are processed by a lender and Direct Loans come directly from the Dept of Ed.
Another phrase you must become familiar with while learning about student loan options is subsidized versus unsubsidized. Subsidized loans entail the government paying your interest while you are in school, while unsubsidized loans you are responsible for paying the interest that accrues during the time you are in school. Although this sounds like it may add up quick, and it does, most borrowers choose to let it accumulate and in turn add it to the principle of the loan.
Private loans are also commonplace when it comes to student borrowers. There are many differences when comparing private loans, such as from banks and credit card companies, to the above noted loans. You want to review the terms in great detail to ensure you are making the best decision for your debt future. The big difference is that private loans are not need based which means you and your parents, if they are cosigning with you, must demonstrate good credit history. In todays marketplace the loans interest rates are competitive and historically low with no repayment required as long as you are in school at minimum part-time.
Its worth mentioning that depending on where you want to work after college, there may be an entire subsection of loans specific to your desired field. For example, if you want to be a teacher there are loans geared towards teachers with varying repayment and even forgiveness structures. These loans typically require you to work in the field for the duration of the loan or until it is repaid forgiven.
[source: U.S. Department of Education].
Now that you have an understanding of what types of student loans there are out there, you can proceed to the next step of actually applying for these loans and working to accept the best awards you are presented with. Check back for the next installment soon!