Vital Essentials On College Financial Aid | Know Your College Loan Options
As the education costs in the US are spiraling out of control and the job market isn’t giving any positive results to the families, an increasingly large number of students are resorting to educational loans in order to fulfill their dream of completing education.
There is a wide array of options through which you can make your dream of attaining a college degree, a reality. But unless you have the a proper understanding, it will be difficult choose the best option. Financial aid comes in various forms from the government but they aren’t so easy to get. You have to qualify for such financial aid so that you may get the money in your account without going through any kind of hassles.
The shocking truth about student loan debt is this: If you take out a student loan and default on the payments, it is most likely that you will accrue a huge amount of debt for which you may have to take debt consolidation help. Student loan consolidation is similar to credit card consolidation but when you have all the college financial aid options, why would you even opt for consolidation?
Basic Types of Federal Financial Aid That Many Students Resort To
Campus-based and federal student financial aid consists of loans through which you can borrow money under the federal school loan program and grants that need not be repaid. Since it is most likely that most needy students will try to look for grants so that they need not repay the money, there are some qualification criteria that need to be fulfilled in order to get the grant money. There are also work study programs through which you can earn money simultaneously while going to school.
The Grant Types: Federal Pell Grants are given on the extent of financial hardship that you will have to demonstrate. However, your college costs and your enrollment status, whether full-time or part-time, are also taken into account. Pell Grants need not be repaid. Another kind is the FSEOG or the Federal Supplemental Educational Opportunity Grants but these are based on campuses and are only rewarded to the students with exceptional financial need. The student borrower may get anywhere between $100 and $4000 per year.
The Loan Types: If you are in a situation where you do not qualify for any need-based aid, you are then able to take out Stafford loans. Federal Perkins Loans and PLUS loans are popular options from the US Department of Education.
- The FAFSA PLUS loans only allow the parents who can show good credit score, to borrow money at a reasonable interest rate to help their kids complete their education and grab an undergraduate degree. The amount that you can get through the PLUS loans is the cost of attending college subtracted from all the other financial aids that you’ve taken. These aren’t based on financial need.
- Stafford Loans can both be subsidized and unsubsidized. Both types can be received for the same school year but the total amount that you can take out will depend on the year you’re in and whether or not you’re an independent or a dependent student. The interest rate on the Stafford loans is 4.70% and it will never exceed 8.25%.
- The Perkins Loans are low interest, fixed rate loans up to $4000 a year and it is given only to those who demonstrate excessive financial hardship. No interest rate will be charged until you start repaying the amount.
Therefore, when you’re wondering about completing your college education, you need not worry as there are financial aid options that can help you achieve your goals. Know the qualification criteria of each of the loan and grant options so that you may be able to take out the best one that suits your needs and budget. Manage your money properly so that in case you don’t get grants and loans, you may take out student loans to complete your degree.
The first thing you want to do to see if you qualify for any Federal aid is to fill out the FAFSA (Free Application for Federal Student Aid). Before you do that, check out our FAFSA Application Series of articles to get a better idea of how this all works!