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Student Loan Website Comparison Chart
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Consumer's Guide To Student Loan Websites
Student loans typically have lower interest rates than personal loans. Because the loan is specifically for use in higher education and related expenses, there are also many government-assisted options as well. Depending on your household's financial situation you may qualify for financial aid. Students and soon-to-be students should always apply for the Free Application for Federal Student Aid (FAFSA), which is recognized by virtually all higher education institutions. Students should apply as soon as possible on or after January 1st (and no later than June 30th) for the following fall semester.
If you qualify for financial aid, you could receive grants, work-study or loans. Student loans, even those from the government, must be paid back with interest; however, certain loans do not start accruing interest until after you graduate.
Subsidized Student Loans are based on financial need. If you qualify for a subsidized loan, definitely take it. Payments on subsidized student loans do not begin until after your education is complete or until your enrollment drops to less than half-time. Moreover, for as long as you are at least a half-time student, these loans do not accrue interest. There is usually a grace period after you graduate (or are no longer a half-time student) of six to nine months before you must begin making payments. You will still owe interest on the loan, but you will not be charged interest for the time that you were going to school at least half-time.
Unsubsidized Student Loans on the other hand function like personal loans (only with a lower interest rate). They are not based on financial need, and interest begins when the money is first disbursed until it is paid in full. You have the option to pay the loan and interest while you are in school or have it deferred until after you graduate. If you defer paying the interest, or "capitalize" it, the interest will be added to your principal. If you capitalize, you won't have to pay the interest as it accrues, but you will end up paying more overall because you'll be paying interest on a higher principal. To keep costs down, you should try to pay the interest as it accrues.
When you are in repayment of your student loan, the interest you pay is tax-deductible (even if you do not itemize deductions), so be sure to include it on your taxes when you file.
Private Student Loan Websites and Lenders
Aside from government-assisted student loans, private loans from banks and credit unions should also be considered. The loan terms vary by lender. Students who do not qualify for government-assisted aid or who require additional loans on top of government loans can turn to private student loan websites and lenders. The interest on a private student loan is typically still much lower than on a personal loan, and some lenders do not require payments to be made while the student is enrolled full-time and they even offer flexible repayment options after graduation.
Federal Student Loan Websites and Financial Aid
In 2010, the government set forth new legislation regarding federally funded student loans. Currently students borrowing money can cap repayments at 15% of their income above a basic living allowance but starting in July 2014 the cap will be permitted at 10%. In addition, if payments are kept up government student loan balances will be forgiven after 20 years instead of the current 25 years (or after 10 years if they are in public serves such as nursing, teaching or the military).
Government Student Loans
Stafford Loans (Subsidized/Unsubsidized) are available to students who qualify. In order to qualify for a Stafford Loan you must be enrolled at least half-time, be a citizen of the United State (or eligible resident non-citizen), sign an application and promissory note, and meet the financial need criteria defined by the federal government. Undergraduate, graduate and professional degree students may be eligible for a Stafford Loan. Stafford Loans are long-term, low-interest loans that are given to (and must be repaid by) the student as opposed to the parent. Repayment begins six months after the student graduates or drops enrollment to less than half-time.
Federal Perkins Loans are repaid to the school. They are only available to students with financial need who are enrolled at least half-time and if the college or university accepts Federal Perkins Loans. Interest rates on Stafford Loans and other direct loans may fluctuate, but the interest rate on a Federal Perkins Loan is a fixed 5%. Repayment begins nine months after the student graduates or drops enrollment to less than half-time.
Parent Loan for Undergraduate Student (PLUS) Loans are loans that parents can take out to help their children pay for higher education. Parents are only eligible for PLUS loans if the child is a dependent, undergraduate student. Independent graduate and professional degree students may also be eligible for PLUS Loans to help fund their education. Repayment of PLUS Loans typically begins after the final disbursement.
Consolidation Student Loans may be taken out by parents or students to consolidate several federal student loans into one loan payment. This can often be beneficial to recent college graduates getting used to living on a budget and making monthly payments because it will allow one statement (or "bill") for all federal student loans so they are less likely to forget a payment. In addition, Consolidation Student Loans may also allow you to extend the repayment period, lowering your monthly minimum payments. Consolidation Loans may not, however, be a good idea if you have a high principal on a loan with lower interest than a loan with a lower principal and higher interest. Because the interest rate is determined by combining the various student loan interest rates, you may end up paying a higher overall rate.
Choosing the Best Student Loan Website
If you can afford to pay for college in full, congratulations! For the rest of us, student loans offer great assistance in funding education. The best student loans are subsidized federal government loans, but not everyone will qualify for those. File your FAFSA, and consider the federal student loan options available to you. If you don't qualify for government assistance, private student loan websites and lenders can also offer relief. The interest rate on a private student loan will still be much lower than a personal loan.
So start your research early, find the best student loan that you are eligible to receive, and consider this your first and greatest investment - in your education and yourself.
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