Small Business Blog

Student Loans to Finance College Education

College education nowadays entails a lot of expenses. In fact, only very few can afford college education without resorting to taking loans. In fact, tuition fees and lodging fees can reach up to forty thousand dollars or more. Lab fees, health insurance, books and meals are not included. In short, college education is very expensive. Because of this, parents apply for federal, state and university grants as well as secondary scholarships to fund the education of their children. The amount not covered by grants is usually paid for by the parents’ own money and student loans, federal or private.

Stafford Federal Loans

Stafford public loans cannot be expected to offer big amounts. These loans are usually limited and the rates depend on financial need. On the other hand, private loans given by credit unions and banks can be bigger in amount. But, the Stafford student loans have the cheapest interest rates and the most lenient terms for repayment. Usually, paying for the loans starts when the student graduates.

Parent Loans for Undergraduate Students

The PLUS (Parent Loans for Undergraduate Students) is also a public loan. It can be availed by parents whose child is still a dependent. A credit evaluation of the borrower is required. The parent can borrow an amount that may reach up to the full amount of the assumed family contribution. The rates are also quite reasonable as it is backed by the federal government. A lot of community banks take part in the PLUS program.

Private Bridge Loans

Getting approved for a private student loan requires that the loan applicant’s and the cosigner’s credit scores meet the cut-off. These loans often have fixed interest rates. The lending institution just adjusts the rate depending on the applicant’s capacity to pay. Generally, students who are bound for college are below 24 years old. This means that they do not have much of a credit history. As such, they are considered high risk borrowers who will be charged with higher interest rates. But, a co-signer with a great credit score can help the student-borrower get a lower interest rate. Getting a private loan for college in Bucks County can be made easier if you borrow from a credit union or a local bank. If your credit score needs some fixing, there are actually credit unions that are interested in providing loans to members interested in fixing credit scores, as these organizations are owned by the member themselves.

In conclusion

A good number of undergraduate students who went to college in 2011-2012 needed some financing from federal programs and private loans. More than 65% of these college students loaned a certain amount to fund their college degrees. Why do students still want a four-year degree in spite of the huge expense? Well, they know that a Bachelors degree can get them in the workforce easily and a post graduate degree helps them get ahead. Yes, college education is important. Just don’t make the mistake of borrowing more than what you need and can afford to pay.

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