Not everyone has perfect credit, nor do they come from families with money to spare for college. There are only so many scholarships out there, and the competition for those is quite fierce. Most students have to look to student loans to help finance their college education. However, it is not always easy to be approved.
We will provide you through the various options available to you.
1. Federal
- Stafford – Perhaps the most widely known and used federal program.
- Subsidized – Financial need is considered for these. Interest does not start accruing until payments come due.
- Unsubsidized – Credit scores and other financial issues are not considered, making it available to most students. Interest begins accruing at disbursement.
- Perkins – This is awarded only to those students showing a severe financial need for the funding. There is a small amount of federal funds set aside for the Perkins Loan, and the college acts as the lender.
2. Private/Alternative
- Parent Loans for Undergraduate Students (PLUS) – PLUS loans are a popular alternative to help finance your education. This unsubsidized federal loan is secured by the parents of the student, who then pay the interest while the student is in college.
- Graduate PLUS – Like the original PLUS, this is a federally guaranteed but unsubsidized loan. It is secured by the graduate student or professional based on their own credit rating, but is granted the same repayment options that Stafford and other federal loans have.
- Colleges and Universities – Another resource for students are the colleges or universities themselves. Some institutions offer assistance to students who reside on the campus to help them with room-and-board and the cost books and other class fees.
- Many banks and other lending institutions have school loan programs. Because qualifying for these is similar to qualifying for standard loans not for educational purposes, many people view private loans as a last resort. Banks most times charge a higher interest rate on their loans and do not offer any leeway with repayment schedules.
3. Bad Credit
Bad credit college loans are available, and there are different types for those people who wouldn’t otherwise qualify for a standard bank loan:
- No Credit Check – These are mainly federally funded loans such as the Stafford and others. Private lenders require credit checks.
- Fast – There are lenders who are willing to provide college loans quickly. However, these lenders often require a cosigner and charge a high interest rate with a strict repayment plan.
- Direct – Thanks to the U.S. Department of Education, these loans are not only available to students with bad credit, they also come with a lower interest rate and various repayment options. The lender is the federal government.
4. No Cosigner
Some people may believe it would be impossible for them to get loans without a cosigner. However, the Department of Education provided for that when they passed the Higher Education Act of 1965. This Act lead to the creation of two entities: the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDSLP). Both FFELP and FDSLP provide funds to be distributed to students who file a completed and qualifying Federal Application for Student Aid (FAFSA) application each year. The competition for federal financial aid is high because applicants from all 50 states can apply for it. So, paying attention to application deadlines has never been so vital. Once the monies are disbursed, you have to wait until next year to apply again.
5. Consolidation
After college, graduates can sometimes get overwhelmed with the different loans and repayment schedules for each. There are several consolidation programs that can help graduates manage their college debt. By consolidating, there is only one monthly payment, and it may be at a lower interest rate than the original loans. This alleviates some of the pressure of repaying and helps many graduates avoid defaulting.
- Federal – Offered through the FFELP, this program is an alternative to defaulting on your loans.
- Private – Many banks regularly offer consolidation loans for an initial low-interest rate. This can be the relief a struggling graduate needs to manage their debt while building their credit.
6. Forgiveness Programs
While not every career has a program for loan forgiveness, there are some careers that are so widely in-demand that programs have been created where they can be forgiven if you agree to certain terms and conditions once you graduate.
- Teachers – Newly graduated educators who teach in qualifying public schools for a specified period of time are having their loans paid by the state as an incentive to bring teachers into inner-city schools that would otherwise not be able to fill vacant teaching positions. Read more on the teacher forgiveness program.
- Medical Professionals – Because of the shortage of nurses and other medical professionals, some hospitals and even state-run facilities are offering to pay all or portions of the college loans for those medical professionals who work in their facilities for a specified period of time.
- Military – Military Reserves have been on-campus for quite some time, but many do not realize that enrollment in those programs can help the participants pay off their school debt. Enrollment with these programs provides financial assistance to the participants, with the student reporting for active duty in the military after graduation.
There are many options for students to enroll in college. While scholarships and grants are preferred methods for paying for college, student loans are the norm. Remember to pay attention to deadlines when applying, as well as what information should be included with your application. There are options for every person and every situation.