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Obtaining student loan help comes in different forms. Many young adults turn to their parents for help. Others will have scholarships or grants. The majority of students will obtain some sort of loan to either pay for the bulk of their education or complete the remainder from other money. It is a rare occasion nowadays to have parents foot the bill with cash saved throughout the child’s life.
Money hunting for tuition assistance can be painstaking and confusing for those who are not financially savvy. Which is better? Go the private loan route or stick to federal government money? It is best to understand what each one will provide and of course, the cost involved over the long-run. Keep in mind that federal loans offer more student debt relief help for those who qualify.
Most private loans are processed through banks, credit unions or private lenders. The going interest rate on this money will depend on the market as well as the applicant’s credit score. These loans are often taken out by the parents with some being secured by the family’s home. Parents who have the ability to obtain low interest private loans look at their child’s future is a good investment. With all the stories about rampant student debt and the troubles it creates for graduates, these parents are happy to help keep their children out of debt in order for them to pursue their career.
There are many different types of federal loans. There are qualification guidelines as well as money limits. The interest rate tends to be lower than private loans, even with the recent increase. The Department of Education offers subsidized and unsubsidized loans depending on the family’s financial situation. Educate yourself on the various federal loans.
There are Direct Stafford Loans which are available to both graduate and undergraduate level students. There are loan maximums to this loan which depends greatly on your grade level. Those who qualify are approved for subsidized loans where the government pays for the loan interest while the student remains in school or during periods of authorized deferment.
A Federal Perkins Loan relies heavily on the student’s financial aid situation and are very similar to the Direct Stafford Loan but at a lower interest rate. A student must qualify to receive this federal help.
There is even a government loan for parents. The Federal PLUS Loan gives parents an opportunity to qualify for a loan to help out their child attend school. The interest rate on these loans right now runs 7.9% with a 4% origination fee. Graduates may also apply for these loans once Stafford loans have been exhausted.
Once federal money has been exhausted, students may want to look at private student loans Students will often need a creditworthy co-signer in order to be approved for this money.
Many parents seek advice from financial advisers prior to sending out applications. It is important to apply for student loan help which will not only provide the most money assistance but offer the most payment flexibility over the long-run.