If you recently won the Lottery or got really lucky in Las Vegas, this article is not for you. If you’re like most students, though, finding good loans for school expenses is vital once you’ve exhausted savings, grants, and scholarships.
Before we discuss some of the most appropriate loans for school, let’s analyze a few of your worst options for covering your college education.
Some Poor Choices
The first character in our rogue’s gallery is credit cards. True, they are quick and convenient. Also they can help you out in a pinch. The fact is, you need them just to function in today’s economy. 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 bury you with ridiculous interest rates, late fees and over limit penalties.
Another awful source of funds is check cashing stores. The interest rates these places charge are enough to choke a horse! 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 plenty of tempting games: cards, roulette, slots, dice, horse/dog races, and of course the lottery. For the casino owners, gambling is a lucrative business. For you, though, this is just a really bad habit to get into. Don’t count on it to pay your tuition.
Then there are title loans, where you sign over the title to your car as collateral for the loan. Typically, you will only get a fraction of the car’s value, and the interest rate is quite high. Many borrowers then find they are unable to repay the loan, and lose their 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, it’s now time to uncover 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 reasonable types of loans for school.
Basically, these fall 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.
Government guaranteed loans for school generally offer lower rates, longer payback schedules, and the option to consolidate loans after graduation. A consolidation loan could lower the overall interest rate as well.
There are three categories of government loans: Perkins loans, Stafford loans, and Grad-PLUS loans. Grad-PLUS is short for Graduate student and Parent Loans for Undergraduate Students.
These three have some various rules, but also share several similarities. At ExploreStudentLoans.com we discuss each of these loans in greater detail. One thing they do have in common, though: you must show a need for the money 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?
Sorry- that was a trick question. The correct answer is, if possible, get both. A scholarship or grant is far better than a loan. If you can qualify for one or more of the many scholarships and grants currently available, by all means, go for it. Loans for school serve to fill in the gaps when you can’t get enough of the free money. Try to keep student loans to a minimum, though, and pay them off as rapidly as possible to keep your interest expense to a minimum.
And finally, be cautious about using loans for school if your chosen career will begin at a relatively low pay grade. 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
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