There is a literal mountain of information I could talk about when it comes to student loans. Fortunately, I hope to wade through the minutia and give you the details that you really need to know about.
The main source of federal student loans is through the Federal Stafford Loan Program. These loans do not require a co-signer, they are simply in your name, as a student. There is also no credit check performed to receive one of these loans.
The application process is very simple, when you complete the FAFSA, there is a question that asks whether you are interested in receiving student loans, answer yes to this question, and when your school receives this information, they will automatically award you the Stafford loans you are eligible for.
Sounds easy right? Well, in all actuality it is very easy. My only word of caution is that student loans are just like any other loan, you have to pay them back! Fortunately, the interest rates are very low and there are numerous repayment options that will allow you to be very flexible with your repayment schedule.
I will post soon on some more details about the Stafford loans such as interest rates, Subsidized vs. Unsubsidized, deferments, forbearance, graduated and income sensitive repayment schedules, and forgiveness options (There really could be a blog dedicated to student loans in and of itself!)
There are also other types of student loans that you may encounter. There are private student loans. This simply means that they are not issued by the Department of Education. These types of loans are issued by many of the big loan lenders: Sallie Mae, Wachovia, Wells Fargo, Nelnet, and even smaller independent lenders such as the SC Student Loan Corporation in South Carolina. Compared to a Stafford loan, these private student loans typically have variable rates that tend to be higher, they also have less flexible repayment options, and most importantly, they do require a credit check. If you do not have established credit or sufficient credit, a co-signer will be required.
I would caution you to keep in mind a few things about student loans. 1st, obviously they are loans and they do have to be repaid! Always remember to factor in student loan payment into your monthly budget after you graduate. Second, when facing the decision of whether or not to take out a student loan, remember that a student loan is always better than a credit card!
Do you have student loans? Would you recommend one loan or lender over another? Are you considering student loans and do not know which is the best?
Pingback: The Top 5 Private Student Loan Questions « Money for College Project
Pingback: The Student Loan Debt Clock | Money for College Project