Procuring Student Loans

Procuring Student Loans

by Adam Heist

Attending a college or a university is not as simple as it seems. Higher studies are something that involves great expenditure, and frankly speaking, average American needs to stretch his/her budget very greatly in order to cover the expenses. In a survey by the college board itself, the estimate of annual college expense - including tuition fees, room and boarding and incidental costs - comes to an astounding figure of $11,000 for a two-year college and $14,000 for a four-year college. If the college is private, then the costs could reach astronomical highs of $30,000 on an average per year. And to top it all, there is an inflation rate of 5-8% per year.

Solving this financial problem often becomes the focal point of student life. This is the reason why the government has come up with schemes to offer loans to students who wish to pursue higher studies. Federal aid has become today one of the largest pools of finance for students in the US. There are $67 billion available for handing out as loans to students to further their educational qualifications.

But there are many factors that determine whether or not a student gets a federal loan. The student is needed to fill out various applications, and then he/she would be granted the particular amount of money for the coming year. The requisites to get such a loan are a high school diploma, admission in a registered college for a stipulated number of days, maintaining a GPA in the classes, and being an American citizen.

The federal Stafford loan is perhaps the commonest of the federal loans available to American students today. This loan is also one of the easiest when it comes to repayment; the student needs to begin paying back only after six months of getting the graduating degree. Subsidized loans are the second-most popular types. These loans are given according to the financial needs of the student. The student requires to be enrolled for at least halftime in college. Contrasting with these are the unsubsidized loans, which are not dependent on the financial needs of the students. Parents are required to pay a certain amount of the loan within a given period of time.

Campus-oriented programs are also a source for obtaining loans. These could be given by the university or college themselves, in the form of grants or loans. The advantage of these loans is that they allow the student to work on the campus and hence return a portion of the loan while studying itself. These loans are dependent on the needs of the student. Such loans also make a student eligible for federal Perkins loans.

To apply government loans, the FAFSA website can be used. March is the month when fresh applications are entertained. Once the application is done, the processing of the loan would begin, which would include finding out which loan the student is eligible for. The options available to the student are put before him/her, which could be accepted or rejected by the student.

Students attending a university can also apply for private loans. These loans do carry higher rates of interest than federal loans, but they also provide more finance. The student needs to hunt a bit more for private loans, as regards lower interest rates.

Federal and private loans are the two main solutions for the problem of financing student courses. One more hidden advantage of getting such type of financing is that the student does not need to bother about inflation in the successive years while the course is underway.