The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
You may have heard that college in this country isn’t cheap. Maybe you’ve even encountered this firsthand for yourself, a child or another family member. But knowing that getting a degree is going to be expensive doesn’t mean you know how to pay for it. When you are a student or even parent of a student starting the college search, it’s a good idea to calculate how much you will have to pay in student loans.
The sooner you know what you are getting into, the better decision you will be equipped to make when it comes to which school to go to, which loan to pick and which repayment method to employ. But who has time to research all the different types of loans you can get? Check out the following student loan options and learn the subtle differences that can make a not-so-subtle difference in your final price tag.
This primary federal student loan option offers a low origination fee and the same interest rate across the board. That’s right, every student who receives a Stafford loan in the same academic year pays the same rate. However, there are two types: subsidized and unsubsidized. The former is available only to those who qualify for financial need. If you are not able to get subsidized loans, you can get unsubsidized Stafford loans that also have the low interest rate, but the government doesn’t fund any interest payments so interest accrues while you are in school. There are ceilings for both options.
These loans are for graduate and professional students, but have a higher interest rate and origination fee than the Stafford loans. They also require a credit check. There is no specific limit for the loan, but the Department of Education says the maximum loan amount is the student’s cost of attendance (determined by the school) minus any other financial aid received. Parents of undergraduate students can also use PLUS loans to help pay for their child’s education.
These are another form of low-interest federal loans, but they are offered straight from your college or university. The ceilings vary depending on graduate or undergraduate status and the school itself. It is important to note that not all schools participate in the program and the loans are only extended to students who qualify for financial aid. There are ways to get help paying back Perkins loans as well.
While they generally offer less favorable terms, private loans can help secure any remaining funding you may need after exhausting all the federal loan options. Lenders offer varying rates, often higher than 10%. Your credit score will affect your ability to qualify for private student loans, as well as the interest rates. You may have to start monthly payments even as you are in school, as not all lenders offer deferment. You can check your credit scores for free on Credit.com to see where you stand before you apply.
Just as there are different loan options, there are also different plans for paying the loans back to your lender. You can repay as scheduled, where possible. This means that you pay your bill every month until the balance is gone. You can also consolidate all your federal loans and qualify for extended repayment, which stretches out the term up to 30 years. However, this does mean you pay more in interest over time.
With federal loans, you can also consider income-based repayment where you pay back your loans based on how much you make instead of how much you owe. Repayment formulas vary.
Student loans can be a real drag especially during your first few years in the workforce, but the investment in your education can pay off big time in social, emotional and even future financial well-being.
Image: iStock
August 26, 2020
Student Loans
August 4, 2020
Student Loans
July 31, 2020
Student Loans