When you start applying to colleges, you'll find out that tuition and room and board costs are very high. Unless they already have a lot of money, most people can't pay for college on their own. Even with the help of regular financial aid grants, paying for school can seem nearly impossible if you don't qualify for scholarships. But there are a lot of student loans with low interest rates for students who qualify. You can borrow money and put off paying it back until you graduate and get a full-time job that pays enough to cover what you owe. This is better than putting off your education.
The first step in getting a student loan is to fill out the Federal Application for Student Financial Aid, which is an application form for financial aid. When you are accepted to a college or university, you will get a packet with information about how to pay for it. You will be asked about your and your parents' finances so that the aid agency can figure out what you need and what you can pay. There are many government grants, like the Pell Grant, that give money to low-income students and their families without ever having to pay it back. But grants can only pay for so much. Most likely, you will need student loans to pay for the rest of your education costs.
If the free financial aid you qualify for isn't enough to cover your costs, student loans can help you get through college and get the degree you need to be financially successful in the future. Both traditional and nontraditional students can get many different kinds of student loans. The school, your bank, or the U.S. Department of Education can pay for federal education loans like Perkins and Stafford Loans. Private education loans aren't backed by the government, and the money for them comes from a variety of places. If you are still considered a dependent, you or your parents can apply for a student loan to help pay for your education.
Most of the time, the interest rates on Guaranteed Student Loans, also called Stafford Loans, are lower than those on private loans. The federal government backs these loans, and they can be paid for by the government or not. If you have a subsidised loan, the government will pay your interest while you are in school. With an unsubsidized loan, interest starts to build up while you're still in school, but you don't have to pay it back until after you graduate. To get a subsidised loan, you have to show that you need the money, but anyone who applies can get an unsubsidized loan.
Direct Student Loans are often the loans that students choose. The school you are going to takes care of your direct loans. Most of the time, the interest rates on these kinds of loans are lower than those on most others. Your college or university may get the money from different places, but most of the time, all of the payments go to the school itself. When you're done with school, you usually have between six and nine months to start paying back any loans you took out.
If you graduate from school and can't pay back your student loans, they may go into default. This can hurt your credit score and make it hard for you to get loans in the future. You can get a postponement on your loans if you decide to go to graduate school or if you are out of work. Deferment, on the other hand, is not forever. If you have a lot of different student loans, you can often combine them using a consolidation service. If you have direct loans, you can also combine them through your school's lender.
