STUDENT
LOANS ARE NOT FREE MONEY
By: Araceli Ortiz
In the summer, I introduced Federal Student Loans as an option to
pay for school. A student loan is money you borrow for your education which you
must pay back with interest.
There are two types of Federal Student Loans students can
potentially qualify for: Federal
Subsidized and Federal Unsubsidized. Both types of loans offer fixed interest rates
and allow up to 10 years to be paid back, but the Subsidized Loan has the best
perks because the government pays your interest accrued while you are in
school. Below is a chart that will allow
you to clearly see the difference between both loans.
Sometimes
Federal Student Loans are not enough
to cover the cost of attendance, in which cases students turn to Private Student Loans. These loans are
non-federal loans, made by a lender such as a bank, credit union, state agency,
or a school. Private Student Loans might
require you to make payments while in school and generally carry a higher
interest rate attached to them. These loans require a credit check and do not
offer flexible repayment options as the Federal
Student Loans.
A great tool that I recommend
before taking out student loans is a loan calculator which gives picture of
your financial responsibilities will look like in the future: http://www.finaid.org/calculators/loanpayments.phtml
You should always try to cover with
your educational expenses with scholarships, grants, or savings first before
considering taking out student loans. Taking out student loans is a great way
to invest in your education; however, it is a serious financial and legal
obligation. As always, make sure you talk to your financial aid counselors to
learn more about your payment options.
