It’s no secret that the cost of higher education is skyrocketing and that it’s becoming more and more difficult for students to afford tuition without taking out a loan. But even if you don’t need to finance $50,000 for private school, there are plenty of loan options available to consider for small amounts.
Federal Student Loans
Loans offered by the federal government are a smart option for students. They boast low, fixed interest rates, flexible income-based repayment options and generous grace periods after graduation.There are several different types available depending on your situation.
- Subsidized loans are based on financial need and come with the added bonus of having the government pay any interest accrued while you are in school.
- Unsubsidized loans are not based on financial need; however, interest begins accruing as soon as you take out the loan, although it does not need to be repaid until you graduate.
- PLUS loans are offered to parents of undergraduate students and to graduate school students.
- Perkins loans are reserved for students with extreme financial need.
To find out what federal student loans you qualify for, fill out the FAFSA form along with your college applications.
Private and Peer to Peer Loans
If you don’t qualify for federal financial aid, or still need help filling the gaps in your tuition bill, various financial institutions offer private loans to students. A newer trend in lending, many peer to peer websites also now offer student loans. The downside is that because most college students have little to no credit history, the lender requires a co signer on the loan until you graduate and meet certain employment and income requirements. Additionally, private loans generally charge an origination fee, which adds to the overall cost of the loan. Be sure to consider this fee in addition to your interest rates.
Finally, many private and peer to peer lenders offer variable rates that are significantly lower than their fixed rate offers. If you choose this option, just be aware that your interest rate can change at any time, which increases your monthly payment. You can always refinance your loans, but with rates still at a historic low, it’s unlikely that you’ll get a much better deal in the distant future.
Attending college may feel overwhelming but by getting your finances in order ahead of time, you’ll remove a major headache. File your FAFSA form as early as possible to gain access to the most federal funding as possible. When all else fails, explore private loans from financial institutions and peer to peer lenders – just be sure to shop around for the best deal out there.