Student loans are a way of life for most aspiring college graduates. The reality is, higher education is not free. Professors and university administration do not hand out degrees for free. On the contrary, a good college education can cost upwards of two to three hundred thousand dollars. A standard four year degree at a local university can still wind up costing in the neighborhood of 80 thousand or so.
The bottom line is, the college experience is going to cost you. There are many ways to overcome this cost. Pell Grants and scholarships are very popular, however, sometimes they do not cover the debt in its entirety. True, you can go the old fashioned route and get a job while you are attending classes. This works for some people. Yet for others it only serves to split their focus and make them far behind in a subject or two. If you are bucking for magna cum laude, that might not be possible with a 40 hour work week attached.
Student loans may be your answer. They come in various types. The basic types are as follows:
Stafford Loans: Federal student loans which may be subsidized or un-subsidized.
Perkins Loans: with low interest. Institutions dole these out to students who have a greater financial need.
PLUS Loans: Student loans which covers extra needs not covered by a traditional student loan. Typically granted to parents and graduate students.
Consolidation Loans: These are loans which combine existing loans so you have only one payment, and more importantly, one interest rate.
Now, to discover which student loan is right for you, the institution will typically make you fill out a financial aid packet. These packets are used to gather information by the federal government to determine your eligibility for Pell grants, the only type of federal and state aid that does not have to be re-payed. Once your aid is determined, you can begin to explore student loan options.
The important thing to keep in mind is this. Student loans have to be re-payed. They are not bankrupt-able. Most universities are required to hold a class where this is expressly explained to you so you understand what you are signing up for before you take out different loans that can cost you hundreds of thousands of dollars.
With that said, student loan companies will work with you to get your payment down to something that is manageable for you. If your payment is too high, then call your loan provider or guarantor and make adjustments to your payment or payment schedule.
There are even things like deferment or forbearance that can help you with your student loan. Deferment acts like a freeze on the loan. You are not responsible for payment during a specified amount of time. It is a true grace period. However, you may only defer your loan so many times so choose wisely when making this choice. Forbearance acts in much the same way, yet the interest continues to accrue and is capitalized (added to) the total amount of the loan. You can handle this one of two ways. Either make the monthly interest payment, or let it accrue and it will be capitalized when you begin making payments again. This may not sound like a lot, but if your student loan amount is great, you might consider making the interest payments to keep your total loan amount at bay.
Final Thoughts about Student Loans
With all of that said, student loans can certainly help finance your education. That is the entire reason they exist. Review the different types above, contact your university admissions office for suggestions on where to obtain further explanation, and decide if using a student loan is right for you!
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