Most of us look to private student loans to fund a college education, but this is only one option. Even for students with bad credit, there are others worth considering.
Finding the money to pay for college can be a challenge, but there are options available that mean everyone has a source that suits them. Most college-goers seek private student loans, but that is only one route to funding open to those embarking on tertiary education.
The other options include federal loans, which many prefer to secure to help them pay for college tuition because of the lower interest rates and better repayment terms. The only problem is that approval for college financing is always associated with the means (or lack of means) to pay.
The final option is available to only a privileged few – privileged in terms of talent and ability. Between the three types, it is possible to secure the student loans or funding schemes needed to make sure that the education needed for a bright future is secured.
Financial aid details can be received at the financial aid office on your college campus. It is not a private student loan, and is better known as public or federal loans since it is the government that either issues the loans themselves or subsidizes it. Understandably, there are a lot of advantages to this kind of financing package.
For a start, because the lender is not looking to make a healthy profit, the interest is usually charged at rock bottom rates, while the repayment schedule is very flexible. With these terms, the loan itself is very affordable, but getting approval for college financing like this is not that straightforward.
Applicants have to be able to prove they are in need of financial help, so they are often means tested. This involves the lender checking parents and personal income to see if the federal student loan is really needed at all. The two most common programs are Stafford Loans and Perkins Loans.
Everyone will seek a federal loan, knowing that the interest on them is low. However, for many college-goers, private student loans are the only option. These are charged at higher rates of interest, and often come with clauses that ensure the lender makes their profit. However, they can also come with a period of grace extended until graduation.
Most colleges will help new students with the application, but it is important to note that the documentation and information provided must be given by the applicant. Usually, approval for college financing is greatly helped by a cosigner – a parent or relative who promises to cover loan repayments if the student is not in a position to meet the repayments.
This strengthens the application, but remember that the terms of the student loan can include a period of grace. During vacations, when summer jobs can be secured, there is an opportunity to pay off some of the loan balance. However, once graduation arrives a definite repayment schedule will be introduced.
There is a third funding option that can see students access the money needed to pay for their college education, and it is infinitely better than a private student loan. That is because a scholarship never needs to be repaid, so there is no debt to keep a graduate or student up at night.
However, a scholarship is also the hardest funding source to qualify for. When seeking approval for college financing, it is necessary to prove an ability to prepay. But for a scholarship, it is the institution that decides based on a talent or aptitude that sets the receiver apart from others.
It could be based on sporting ability or academic ability, but unlike a student loan, the person who benefits must be recognized as special.
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