Choosing the right college loan(s) will help students finance their education and avoid a bad experience when repayment becomes due. Failure to understand the rules and the options, on the other hand, can lead to unpleasant surprises and serious financial difficulties.
There are two main types of student loans; subsidized and unsubsidized. The important difference between the two is who pays the interest while a student is enrolled in college.
Subsidized student loans are limited to students who demonstrate financial need: students whose incomes are not sufficient to meet college costs. There is a fixed limit on the subsidized loan money students may borrow, but the government pays the interest on such loans while students are enrolled in college and during the first six months thereafter.
Unsubsidized loans are available to all students, regardless of financial need, and are available in larger amounts. However, students are responsible for the interest payments.
In most cases, students who qualify for unsubsidized loans need the maximum they are allowed to borrow. If they require funds beyond the subsidized loan maximum, they may turn to unsubsidized loans for additional assistance.
Students can apply for the Stafford Loan or the Perkins Loan. Neither has to be repaid while students remain in college.
There is also the PLUS loan, which can be taken out by parents. The PLUS loan offers a relatively low interest rate, but requires repayment to begin sixty days after the loan is awarded.
Please be aware that student loans must be repaid, without exception. Even bankruptcy does not free borrowers of the obligation of full repayment. Generally, lenders will work with anyone making a good faith effort to repay their loans, but those who avoid contact with lenders or simply refuse to make payment may be subject to harsh penalties which including wage garnishment and the withholding of income tax refunds.
Students and their families should not fear student loans. They are a great way to help people get the education they need to have a meaningful career and earn far more than they would with only a high school diploma. But, it pays to shop for and fully understand your options and to avoid borrowing more tahn you really need.
There are two main types of student loans; subsidized and unsubsidized. The important difference between the two is who pays the interest while a student is enrolled in college.
Subsidized student loans are limited to students who demonstrate financial need: students whose incomes are not sufficient to meet college costs. There is a fixed limit on the subsidized loan money students may borrow, but the government pays the interest on such loans while students are enrolled in college and during the first six months thereafter.
Unsubsidized loans are available to all students, regardless of financial need, and are available in larger amounts. However, students are responsible for the interest payments.
In most cases, students who qualify for unsubsidized loans need the maximum they are allowed to borrow. If they require funds beyond the subsidized loan maximum, they may turn to unsubsidized loans for additional assistance.
Students can apply for the Stafford Loan or the Perkins Loan. Neither has to be repaid while students remain in college.
There is also the PLUS loan, which can be taken out by parents. The PLUS loan offers a relatively low interest rate, but requires repayment to begin sixty days after the loan is awarded.
Please be aware that student loans must be repaid, without exception. Even bankruptcy does not free borrowers of the obligation of full repayment. Generally, lenders will work with anyone making a good faith effort to repay their loans, but those who avoid contact with lenders or simply refuse to make payment may be subject to harsh penalties which including wage garnishment and the withholding of income tax refunds.
Students and their families should not fear student loans. They are a great way to help people get the education they need to have a meaningful career and earn far more than they would with only a high school diploma. But, it pays to shop for and fully understand your options and to avoid borrowing more tahn you really need.
About the Author:
Janet Madden is the Director of Guidance at a large, urban high school. In addition to working with high school students, she advises adults in her school's evening programs on online colleges and accredited online degree programs.
Posts
No comments:
Post a Comment