It can be very tempting to simply cruse through the student loan processes without taking the time to understand how it works, OR understand that by learning about ALL your college financing options (beyond student loans) you could save yourself some serious cash. StudentLoansForCollege.org has put together a mini “Student loans 101″ tutorial to get you started on learning about the student loan processes, and learning about your best options. Please utilize all the other information about student loans on StudentLoansForCollege.org to learn about all the options you DO have for financing a college education.
“Student loans 101: Getting Started!”
1. Explore Ways to Reduce the Amount of Student Loans You Must Borrow
Student loans work in much of the same way as any other loan you borrow (i.e. you WILL have to pay the amount of money you borrow in student loans back, and most of the time with interest). So first ask yourself things such as:
- Can I lower my monthly expenses to not have to borrow so much in student loans?
- Is working more during my college school years an option for me?
- Are there scholarships or grants I qualify for, and have I exhausted all of these options?
So the equation is simple, the more money you can reduce, bring in, or get by free money college sources, the less you will have to borrow in student loans, and thus the less you will have to pay back.
2. Exhaust Federal Subsidized Loan Options First
If you do need to borrow student loans (which most of you will), first apply for the least expensive student loans. These are generally the student loans with the lowest interest rates, and the lower the interest rate, the lower the total cost you will have to pay back upon graduation. So lets take a look at the least expensive student loans for college (in order), and then begin by filing a FAFSA to apply for these loans (it should be noted that if you have access to a special student loan source which some members of the US military may, the terms of those student loans can be just as good as the Perkins or subsidized Stafford).
- Federal Perkins Loans
- Federal subsidized Stafford Loans
- Federal unsubsidized Stafford Loans
- Federal parent PLUS Loans
- Private (alternative) loans
3. Never Borrow More Then You Absolutely Need
Student loans can be tempting, because need-based loans are easy to apply for and don’t require payments while you’re in school. For many students these are the first loans in your life you are applying for so it can be tempting to borrow the maximum amount, even though you do not need that much. You are NEVER required to borrow the entire amount shown in your award letter, and should not borrow anymore in student loans then you absolutely need. Remember ALL the money you borrow in student loans will have to be paid back with interest, so if you borrow more then you need and spend that money on extra curricular (non education) items, you just gained an interest charge on that pizza and drinks.
Tags: applying student loans college, FAFSA, federal student loans, Private student loans, Scholarships & Grants, student loans
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