If you recently won the Lottery or got really lucky in Las Vegas, this article is not for you. Most students, though, come to realize that they must find good loans for school to pay the tuition fees and expenses that were not covered by savings, grants or scholarships.
In a moment we'll discuss a few reasonable choices among available loans for school. But first let's discredit some really bad choices that many students have made.
Some Poor Choices
First off, since they are so widely used: credit cards. Admittedly, they are convenient to use and can bail you out of some tight situations. Realistically, you have to have them to function in our society. Try renting a car or making an online purchase without one! But seriously, for financing your tuition? Only consider them if you have a rock-solid plan to pay them back. Otherwise, credit cards can annihilate you with ridiculous interest rates, late charges and over limit charges.
Another terrible source of funds is check cashing stores. When you look at the cost of borrowing from them as an annualized rate, you won't believe your eyes! Seriously, if you use these often enough you may never recover. Look, if you don't have the money right now, what makes you think you'll have it in 2 weeks? Avoid these places!
So how about gambling? There are lots of cool games: poker, roulette, slot machines, dice, horse/dog races, and of course the lottery. For the casino owners, gambling is a lucrative business. For you, though, gambling is just a really bad habit to get into. It won't pay your tuition. Don't waste your time (and money).
Another character in our rogue's gallery is the title loan, which requires you to sign over your car title as collateral. Typically, you will only get a fraction of the car's value, and the interest rate is quite high. All too often, the borrower is unable to keep up with the payments and ultimately loses the car. If you are willing to give up your car for much less than what it's worth, why not just sell the car and put the cash in the bank? At least you'll earn some interest instead of paying it.
Some Better Choices
Assuming you have made every reasonable effort to get scholarships and grants, you'll need to find the student loans you'll need to cover all the rest of your expenses. So let's have a look at some of the more affordable types of loans for school.
We can place these into two categories: private student loans and government guaranteed loans. Private loans are funded by banks and other institutions. These loans generally carry a higher rate of interest than the government loans. Every lender has its own rules. You might need a cosigner, and you probably will need a fairly high credit score to qualify.
Federal loans for school are typically available at lower interest rates, can be repaid over a longer period of time, and offer the option to consolidate them after graduation.
Among the government loans are three categories: Perkins loans, Stafford loans, and Grad-PLUS loans. Grad-PLUS is short for Graduate student and Parent Loans for Undergraduate Students.
While each of these programs has its own rules, they share some similarities as well. At ExploreStudentLoans.com we discuss each of these loans in greater detail. One important requirement that they share, though: you must show a financial need in order to qualify for the loan program. For all of these, you will need to submit a FAFSA (Free Application for Federal Student Aid) form to verify your eligibility.
Should You Get a Scholarship or a Student Loan?
Well, DUH! Who doesn't like free money? A scholarship or grant is far better than a loan. You just might be surprised at how much you can get in grant money that you'll never have to repay. Loans for school serve to fill in the gaps when you can't get enough of the free money. Try to keep the loans to a minimum, though, and pay them off as quickly as possible to keep your interest expense to a minimum.
A final word of caution is in order here. If the starting pay in your chosen career is relatively low, try to avoid taking out more loans for school than absolutely necessary. If that is the case, you may want to consider working part time to "pay as you go" for your expenses. Many students have graduated with a debt load that proved to be a heavy burden to carry for years. If you practice frugality now, you'll thank yourself for it later.
Low credit scores? Read this:
Student Loans For Bad Credit
Get more tips on finding the best student loans: http://ExploreStudentLoans.com
