When I was in college, I didn ' t know a lot about student loans. My requirements for selection a loan could be summarized in one simple question: " Can I qualify? "
Sadly, this isn ' t an gain. I wasn ' t really into learning about how the process of borrowing money for school works and how much you end up paying in actual interest.
For the last few years, I ' ve learned a lot more about bill. I now know that an extra 1 % on your interest rate can cost you tens of thousands in interest over the life of a student loan. That ' s a massive difference.
Choosing the right option is crucial to your financial future. For that reason, I want to help you to choose the best available option.
Subsidized Stafford
Stafford loans are pretty hard to beat, especially the subsidized kind. The federal government pays the interest on these loans while you ' re in school. In other words, for as long as you ' re in school, these loans are interest free.
The downside to these loans is that when you finish school, at times these loans will have higher interest rates than other loans. For this reason, it ' s fairly common to see people restructure their loans once they finish school.
Unsubsidized Stafford
These loans are also very cheap in terms of interest. However, interest isn ' t taken care of while you ' re in school.
Perkins Loans
Perkins loans are fantastic loans. However, most people cannot qualify for these loans which are reserved for individuals that carry substantial need. The qualifying process for these loans looks at whether you have any other options and whether your family can help pay for your school.
Pell Grants
These grants aren ' t loans at all but are a fantastic option. If you need help paying for school and don ' t have family that can help, you may be in luck. These grants don ' t have to be paid back. I personally would look into these before I took out a loan.
Without question, private loans are going to be the most expensive. On top of that, they are generally the hardest to qualify for. Since the government isn ' t involved in the approval process, your credit history will be more scrutinized if you choose a private loan. For these reasons, I wouldn ' t recommend going with a private loan unless you don ' t have any other decent options.
All of these loan options will have different approval processes and interest rates. I would shop between each of them and weight the cost of each accordingly.
