Best Student Loan

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Who Offers the Best Student Loan?

Does the cost of a student loan vary among the different types? The answer is yes! You should be very judicious  about choosing the appropriate  student loan for you.

The simple answer is that federal student loan programs  such as the Perkins, Stafford, and PLUS loans are the most reasonable options meant for students. These loans come from varying sources depending on the school you attend, but the fixed interest rates and terms of repayment are established  by the federal government. So you essentially  can' t go wrong with these loan types.

Private student loans are a completely different story.

Private student loans are commonly  offered by banks or other lending institutions and come with variable interest rates that can adjust on a monthly basis . In addition, these loans may also come with fees depending on the worthiness of your credit. Private student loan programs vary greatly from institution to institution and can be expensive.

If you require a student loan to help pay for college, you are required to complete the FAFSA form at www.fafsa.ed.gov.

Nearly all students will need assistance  from a parent in completing the FAFSA, but this is the only way to gain access to low-cost federal student aid.

1. There are three types of student aid offered by the federal government:

Grants: This type of financial aid does not have to be repaid, unless you withdraw from school and owe a refund, or some similar situation.

Work-Study: This program allows you to make some money to pay for your education. This sort of aid does not need  to be repaid.

Federal Loans: These loans allow you to borrow money for your education. You will be required to repay all loans, with interest. These federal loans come with fixed interest rates and are more often than not the least expensive form of student loans.

2. Outside of federal aid, there are also private student loans available.

Private Student Loans: These loans are typically  given  by lending institutions to help pay for your education costs. Unlike the federal student loans, private loans come with variable interest rates that can be changed on a monthly or quarterly basis . Most students will need to apply with a creditworthy cosigner (such as a parent) to qualify.

To save money, students ought to make use of all of their options for federal student aid before taking a private student loan into consideration.

3. So here is a list of the student loan options for you to consider:

Federal Perkins Loans (Best Choice Option)

- Offer a fixed rate of 5 percent

- Receive up to $5,500 a year

- No payments until after you leave school

Perkins Loans are offered through participating schools to undergraduate, graduate and professional degree students. They are made to students who can demonstrate financial need and are also enrolled part or full-time. These loans will be paid back to your school.

Federal Stafford Loans (Best Choice Option)

- A fixed rate of 6.0 or 6.8 percent

- Receive up to $9,500 your first year

- No payments until after you leave school

Stafford Loans are for undergraduate, graduate and professional degree students. You must be at least a half-time student to be eligible for a Stafford Loan. Two types of Stafford Loans are available: subsidized and unsubsidized. You must have demonstrated a financial need to receive a subsidized Stafford Loan. The U.S. Department of Education will subsidize (pay) the interest that accrues on subsidized Stafford Loans during certain periods. Financial need is not required to get an unsubsidized Stafford Loan. You will be responsible for paying the interest that accrues on unsubsidized Stafford Loans.

Federal PLUS Loans for Parents (Good Choice Option)

- A federal loan that parents can use to pay for a child's education

- Fixed rate of 7.9 or 8.5 percent

- Receive up to total cost of education

The PLUS Loan can be a useful option if a parent is willing to help pay for school. PLUS Loans are loans that parents can obtain to help pay the cost of education for their dependent undergraduate children. A number of parents prefer the PLUS Loan to taking out a home equity loan for the reason that they do not have to put their home at risk. For parents it can offer a better option for those who are considering taking money out of a retirement account for education purposes. Additionally, students working towards graduate and professional degrees may get  Graduate PLUS Loans to help pay for their own education.

Private Student Loans (Last Choice Option)

- Must have good credit or a cosigner to qualify

- Will come with a variable interest rate

- Can generally  cover all education costs

- Payments can be delayed until after school

- You should choose a private loan where the school certifies

the loan and receives the funds for you...

- You should avoid those private loans where the money comes straight

to you as these loans can be very, very expensive!!!

Private student loans from banks can present a good option after you have maximized all of your federal student aid options first. Because private student loans are usually more expensive than federal student loans, we do not recommended that you use a private loan to cover all of your education costs. If you do need to take out a private student loan, use that money to cover your extra or left-over expenses. Also, if at all possible, it is a good idea to make the interest payments on your private loan while you are still in school. If you do not, you could be astonished  by the amount of interest that has built up during the time you were in school. And if you are a graduate or professional degree student, consider using a Graduate PLUS Loan before taking out a private student loan.

An a last word of advice: Be sure to check out your all of you free money options before considering any student loan.  The best student loan is the one that is never needed!