An Education on Education Loans
"An Education on Education Loans" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012
There are two main categories of education loans: Need based loans are federally insured, government subsidized and awarded to families to assist in covering the family contribution when no cash is available. In most cases, the federal government covers the interest while the student is in school. Loans that will be offered as part of your aid package in the award letter are primarily need-based loans. Non-Need based loans are federally insured and awarded to families to assist in covering the family contribution. Both the federal government and financial aid office are responsible for determining which type of loan you will be eligible for and a dollar amount for which you are eligible.
Federally subsidized Perkins and Stafford loans are examples of need-based loans. Whether a family considers them necessary, or not, families should consider accepting them. The interest rate is below prevailing interest rates and if the student meets certain status criteria, the government pays the interest while the student is in school. In most cases, the student is not responsible for accrued interest and repayment does not begin on Perkins or Stafford loans until the student graduates, leaves college or graduate school, or drops below half-time status. Even if you have the money, families should still consider accepting these loans. The family college fund can sit in the bank and earn interest until the student is ready to leave school.
To get a better understanding of your loan options, click on the subjects below:
Other possible loan sources include home equity loans, lines of credit and retirement plans.