Monday, 25 June 2012

Federal Vs Private Student Loans

By Richard Andrews


Being accepted into a good college is a dream for many students. Once you get there, however, it can be pretty tough unless you have a steady source of funds to keep you going. Many students look for the best student loans to help pay for general living expenses.

I studied business and dreamed of financial freedom.

It was great fun but unfortunately needed to work part-time on top of all my studies. Not everyone can find a job or is able to work. If this is the case then finding a student loan to get you through college life may be necessary.

As you can imagine there are almost as many loans types as there are students! We'll have a look at some of the primary sources and features of these loans below.

There are two major sources for student loans, the Federal Government and private lending institutions. A Federal loan is the cheapest way to fund your college degree but these loans generally only provide enough to pay for your basic college expenses.

There are a few different types of Government loans and the school where you are attending should be able to help you find a loan that suits you. Some loans will require interest payments to be made immediately while others are interest free until you complete your college degree.

Make sure you are aware of all of these details before signing up for a loan. You need to be confident that you can make the repayments if and when they are due. While Government loans generally make things easier for students they only provide for the bare necessities; that's why many students turn to private lending institutions for addition funds. This is where things get a little bit complicated and some students find themselves in difficult situations with loans they just can't repay.

When it comes to dealing with the banks remember that they are there to make a profit. No matter how nice they may sound their primary concern is being able to sell you money while reducing their risk as much as possible.

For this reason the cost of the loan, that is, the interest rate will depend on you and your co-signers, perceived risk. The better the credit score the lower the interest rates and the better conditions you will find.

Before you sign anything make sure you check with your school to see if they have any information on the types of loans available. They are a great source of knowledge and should be able to point you in the right direction.




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