The cost of college is not getting any cheaper. College tuition continues to rise, making the price tag soar into the hundred thousands. Although scholarships, financial aid, and work study programs provide some relief for beleaguered parents and poor high school students, student loans are still a defining part of the college experience.
Although private loans from banks and other financial institutions are a viable option, the first step in applying for loans should come at the federal level. Backed by the U.S. Treasury, these loans come with a higher sense of security for both lender and borrower.
In order to receive any type of financial aid, a student must first complete the FAFSA (Free Application for Federal Student Aid) which determines your eligibility. If the government determines you are eligible, then you are free to apply for a federal loan.
The second step in applying is trying to boost your credit. A bad credit rating can destroy your chances of being selected to receive one of these loans. Getting a student credit card or picking up an inexpensive monthly bill can help boost your rating and your chances. If your credit score still is not high enough, find an adult with good credit who would be willing to cosign the loan with you.
The next step involves evaluating which Federal loan is the best fit for you. The Stafford loan can be either subsidized or unsubsidized. In a subsidized loan, the government pays for the loan’s interest during the student’s stay in college and you qualify based on your financial need. The unsubsidized loan is not based on financial need and the loan’s interest must be paid while they are in school. Both loans begin repayment six months after graduation or a change to half-time enrollment. The Parent PLUS Loan allows eligible parents to take out a loan to help pay their children’s tuition costs. Parents must have a good credit history and receive a loan with an interest rate capped at 9%. Finally, the Perkins loan provides low interest loans to students attending college at least half-time who have high financial need. Rates can be as low as 5% and borrowers are not required to begin repayment until nine months after graduation.
Whichever loan you end up choosing, let Atlanta Banking Rates help you find the best student loan rates.
