There’s much to do to get my son ready for college, including the all important question of how to pay for his education. We will be paying for as much as we can out of our pocket while attends college, but there will be some amount of student loans that will need to be taken out. As we’ve navigated the financial aid process, we’ve learned quite a bit about what kind of student loans are available.
Free Application for Federal Student Aid (FAFSA)
The first step in the college financial aid process is to fill out the Free Application for Federal Student Aid (FAFSA). This should be done as early as possible, as it begins the process of the government determining what federal student loans your student might qualify for. Federal aid is awarded on a first come first serve basis, so the sooner the FAFSA is completed, the better the chance that financial aid will be awarded.
Subsidized Federal Loans
Subsidized federal loans usually come with a lower interest rate as the interest is partially or fully paid for by the federal government. Students do not begin to pay back subsidized federal student loans until 6 months after they graduate, or drop below half time enrollment status.
Unsubsidized Federal Loans
Unsubsidized federal student loans are also originated by the federal government, but the interest is not subsidized, thus the interest rate is a little higher. As with subsidized federal loans, students begin to pay back unsubsidized loans 6 months after they graduate or drop below half time enrollment status.
Parent Loans for Undergraduate Students, or PLUS loans, are different from subsidized and unsubsidized loans in that they are loans taken out by the parents of an undergraduate student to help pay for their child’s education. PLUS loans can also be utilized by graduate students. Payback of these loans begin 60 days after the final disbursement of the loan, but can easily be deferred until the student graduates or drops below half time enrollment.
Private Student Loans
If a person is unable to secure enough federal financial aid to pay for college, and more assistance is needed, students can apply for private student loans. Banks as well as credit card companies offer student loans. Students utilizing private student loans should shop around and look for loans with the best interest rates. To help increase the chances of qualifying for private student loans, parents can cosign for their child.
Student loans are a reality for many college students. Students attending college should first exhaust all grant and scholarship opportunities, as well as look for ways to pay for as much of their education as possible out of pocket. But if additional funds are needed, knowing what student loans are available, and how to obtain them can help students get their degree.