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Student Loan Basics

By Yvonne Lapp Cryns

A student loan is money that is borrowed to pay the costs of going to college.  There are two types of loans: government and private. 

Government Student Loans

The First step in getting a government student loan is completing a FAFSA, the Free Application for Federal 

Student Aid.  The application is available online at: www.fafsa.ed.gov.   FAFSA’s can be completed after January 1 for the next fall’s classes.  In order to complete a FAFSA, you need to know your tax information.

The FAFSA acts as an application for all federal student aid and loans.   There are four kinds of federal student loans:

  • Federal Stafford Loan
  • Federal PLUS Loan
  • Federal Graduate PLUS Loan
  • Federal Consolidation Loan

The Stafford Loan is need-based and given to the student and do not require a credit check.  This loan does not need to be repaid until after the student leaves school or drops to fewer than half-time enrollment.  

The PLUS loans are for the student, but are given in the name of the parents and do require a minimal credit check.  They need to be repaid as soon as the loan is disbursed.

Consolidated loans are given to students after graduation and to parents who need to extend their payments.  It combines all the federal student  loans into one loan and locks in the interest rate.

Private Student Loans

Students and their parents who need more money than what the government loans can provide may get private loans to cover their school expenses.  These loans are from banks and other lenders.  They will require a credit check and many students may find they need a co-signer in order to get this type of loan.  There may be fees involved in getting the loan and interest rates may vary widely. 

Other Sources of Student Financial Aid

Before seeking loans, students and their parents should seek out free sources of funding for education such as scholarships, grants, work-study.  One source for other financial aid alternatives is:
http://www.studentaid.ed.gov/PORTALSWebApp/
students/english/othersources.jsp?tab=funding.

 

Author Bio

Yvonne Cryns is the owner of  2000CreditCardDebt.com. Yvonne is an experienced writer/researcher who will research and write articles for you. Her articles may NOT be used unless permission is granted. Contact Yvonne at  wahmwed@yahoo.com.

 		 

 

 

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