How To Afford A School Loan
Doug Smith

Defined Tag: School Loan.

With the high cost of tuition, a school loan is usually required to earn a college diploma. A high school diploma is no longer suitable for finding a good job. Employers want trained, educated employees with university degrees related to their line of business. Therefore college is mandatory, and that usually means a student loan for higher education is mandatory too. Even state colleges are becoming more expensive, despite lower in-state tuition fees.

Two basic types of educational lending are available. A need-based college loan is best for students (and their parents) who will need help paying tuition and other costs of campus life. These loans help pay for some of those costs. Non-need based financial aid loans can pay some of the parents' tuition contribution when they cannot. A loan counselor can help you decide which is right for you.

A federal Stafford Loan provides low simple interest money (as opposed to compound interest) and is a guaranteed government loan. No collateral is required, and both graduates and undergraduates can take advantage of this financial aid. A maximum interest rate is assigned once the loan is approved, and the annual percentage rate on the borrowed cash will never exceed the maximum value. While the student attends university, the Stafford's interest rate is low and fixed. After graduation, the student has a 6-month grace period before the repayment must begin.

There is also the "Parent Loan for Undergraduate Students" or PLUS financial aid loan. This is also a federal loan and similar to the Stafford financial assistance. It is not based on need, nor is collateral required. The interest is simple on this loan guaranteed by the government. Undergraduate parents can borrow PLUS loans to pay all college costs. The PLUS principal is reduced by the amount of any merit scholarships, grants, or other similar financial aid. These 10-year loans have no prepayment penalty. The parents can even begin repaying the loan while the student is still attending university.

You can never anticipate all the costs a student will incur while attending college. If your government student loan does not cover everything, private lenders can help. They offer educational loans that are similar to the federal ones, including low rates, no fees, deferred repayment after graduation, and flexible repayment plans. Whichever financial aid options you choose, an investment in a school loan for a college education will repay itself many times over.

Copyright 2008 by Doug Smith. All Rights Reserved Worldwide. Unauthorized Duplication Prohibited. Not Intended As Professional Advice.