Options For Student Loans: What Are A Students Options For Financial Aid?

Posted on January 15, 2009
Filed Under Student Loans |

When it comes to student loans, students should be aware of and do research on any financial aid options available to help further their education. One of the greatest consequences of attaining a higher education is its cost. The more information students have on financial options available to them, the better their decision making. With costs of education rising to tens of thousands of dollars, students as well as parents and other close members, need to know where to go for help and how they can prepare for the future.

There are two resourses available for options on financial aid the student can turn to:

Family and Friends:

Your family and close friends and relatives all have your best interests in mind and heart. Parents are tending to plan for their children’s future even before their birth all in the hopes of them not having to worry about student loans at all. One option for parents is to acquire a suitable insurance plan where it can be paid off within a defined period of time.

In the United States parents can setup a 401K retirement fund with the resultant monies applied to the student’s future educational needs. A good tax professional should be consulted when parents plan to invest funds for their child’s future educational costs.

Outside Resourses:

When researching for outside sources of student loans and other financial aid, students would do well to know the types of loans they have available to them.

Direct Student Loans

- For many students seeking options to pay for their education, they must turn to other providers of student financial aid. A good place to begin research is by doing a Google search on the Department of Education and inqure about their Direct Student Loans.

Direct student loans can be subsidized or unsubsidized. With the better option being a subsidized loan, the student receives the assistance in proportion to their tuition needs. A cap is placed on unsubsidized direct student loans regardless of the amount needed. The terms, conditions and interest rates of these types of loans should be compared with other options.

Federal Student Loans

- One of the best options for students seeking financial aid are Federal Student Loans. These types of loans are based on income and availability. Qualifying students must meet the governments standards for low income status. Interest rates and repayment options are quite favorable for students that do qualify. Students should not be fooled into letting these favorable terms coax them into borrowing more than their needs.

Private Student Loans

- An alternative to relying on the government for financial aid, a student can apply to private lenders for the needed support. Benefits for private loans can be quite comparable to Federal loans. Besides tuition, other expenses qualify for private student loans such as books, supplies, computers and living expenses. Students may require a co-signer for private student loans if they are not able to establish enough of a positive credit history with the lender.

An advantage to these types of loans is that the funds can be made available within one weeks time. As the funds are paid to the student instead of the college, the student is responsible for expenses related to their education. As long as the student is enrolled at least halftime, their required payment will be deferred.

Pell Grants

- A program by the U.S. federal government, many schools automatically apply for Pell Grants for their students. Pell grants never have to be repaid where student loans must be paid back. Students still need to qualify to receive the maximum amount available. Pell grants can be applied directly to your school expenses for you, or a check made out to you for disbursement on your own.

Scholarships

- Scholarships are given to qualifying students to offset expenses for their education. Necessary student loan funds can be decreased if rewarded with scolarships. Many schools have counseling services to assist students in their search for scholarship funding. A growing amount of companies are providing scholarships through local school systems.

Their goal is to encourage students to enroll in areas congruent to the company’s line of interest. Terms may also include working for the company for a defined period as a stipulation for receiving the scholarship. Stipulations regarding performance may also apply to outstanding athletes as well. There are also scholarships available to minority groups to encourage members to further their education.

Student Loans for Graduate Students

- If students wish to continue their education at the post-graduate level there are still options available for student loans. Two of the most prominent loans for graduate students are Perkins Loans and Stafford Loans. These two loans are programs put out by the U.S. federal government. Perkins loans are favored by students who can prove financial hardship on their part. Stafford loans are available to graduate students regardless of financial status. Interest on these types of loans are paid by either the student if it is unsubsidized or by the government if the graduate student loan is subsidized.

To apply for Perkins and Stafford graduate student loans, students need to complete a FAFSA - Free Application for Federal Student Aid. When a Student Aide Report has been processed by the government and sent to individual students, instructions on applying for both loans will be provided. As the turn around time can be at least eight weeks, it is advisable to apply early. Students can make an application online by going to www.FAFSA.ed.gov.

There are also Private Graduating Loans available as alternatives for graduate students. These are funded by private entities such as private companies, banks, and credit card agencies.

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