As cooler months approach and leaves change their colors, the biggest question some college students face when heading back to school is how to pay for it. Scholarships and grants typically do not cover all the expenses of tuition, books, and housing. Borrowing money from their university, the government, of private-sector lenders is what pays the bulk of many students’ education costs.
Federal Loans
Stafford and Federal Perkins loans have low interest rates, deferment options, and do not require a credit check. To be eligible for these loans you must complete a FAFSA form each year and sign a master promissory note. A promissory note is a legal document binding you to repay your loan based on the terms of the note. These loans are distributed by your school and the remaining funds can either be set aside or given to you in a check. Federal loans may be subsidized or unsubsidized, depending on the preference of the borrower.
· Subsidized loans are based on financial need. The government pays the interest while you are in school, and you have a six month grace period after graduating to begin repaying your loan
· Unsubsidized loans require you to pay the interest from the time you are awarded the loan, but you can defer the payments until you have graduated adding the interest amount to your loan balance
Private Loans
Students also have the option of taking out a loan from a private lender, such as a bank. It is not necessary to submit a FAFSA for one of these loans, but you will have to apply through the private organization and meet their standards to qualify. Private loans are more expensive than those from the government because they tend to have higher interest rate or rates that are not fixed. A hard money loan is a type of private loan backed by the borrower’s real estate. This could be an option for students whose parents own real estate and are willing to place a loan in their name. All that is required is proof of ownership to be used as collateral.
Consolidated Loans
These loans offer student the chance to combine all the different federal loans they received into a lump sum loan with one monthly payment. You can take longer to repay your loan and have lower monthly payments. Both the Stafford and Federal Perkins Loans are eligible for consolidation.
For money information on hard money loans and other types of student loans, contact the Pitbull Mortgage School at http://www.pitbullmortgageschool.com
Joseph Devine
