One of the first decisions you will need to make as a recipient of financial aid for college is whether or not you are going to accept student loans. While, of course, borrowing money for any reason is not a decision to be taken lightly, student loans are relatively safe option for obtaining the money you need to attend college, if you do not have enough financial resources in hand. The interest rates are fixed for the life of the loan, and the rates are usually much lower than other types of loans. Parents of students can even apply for loans to help defray college costs for their families. There are many, many adults who have obtained student loans to pay for college, and who have made good use of those loans by achieving professional success they otherwise would not have been able to achieve. Even Clarence Thomas was still paying his college loans when he became a Supreme Court Justice! However, federal student loans and private student loans do not have the same terms, and it is important that you understand the difference.
Federal Student LoansThe most common federal student loan is the Stafford Loan. These funds are available to students who are enrolled in school at least half-time, and demonstrate financial need. There are both Subsidized and Unsubsidized Stafford Loans; the difference between these two loans is that Subsidized Stafford Loans do not accrue interest while the student is in school, while Unsubsidized Stafford Loans do. All federal loans also provide a six month grace period after graduation before payment ensues. Another type of federal student loan is the Perkins Loan. This type of loan is reserved for students who demonstrate "significant" financial need. Benefits of this loan are similar to subsidized loans, but also include no administrative fees and a longer grace period before loan repayment. Finally, there are options for parents who need to borrow funds in order to pay for their child's college. The Federal PLUS loans are available for parents who qualify, and can cover up to the entire costs of attending college. Interest rates are very good with this loan, but parents must pass a credit check.
Private Student LoansAfter you have exhausted all of your federal student loan options, you may want to research private lending options. Private loans, such as the Signature Loan, depend heavily on your credit history. Terms and conditions for private loans vary greatly, and some lenders can have high interest rates that begin accruing immediately; so students and parents should be vary wary when deciding on private student loan options. However, small private student loans may be a good choice for you if you only need a small amount to supplement the financial aid you are already receiving.
It is very important that you recognize that student loans are a debt that you absolutely must pay off. You will not be able to forgo any of this debt during times of financial distress; even if you file Bankruptcy. The federal government can even garnish your wages to recover the amount of your federal student loans. However, all student loan lenders offer choice for repayment, including graduated repayment, limited-time forbearance, and payment deferment during times of further education. As long as you are in constant communication with your lenders, you should not have undue difficulty managing your student loan debt after graduation.