Studying is always a money intensive activity to take up. When you consider that most students have not had the chance to enter the workforce yet, you will learn to appreciate how big a financial burden a student can have on his hands to complete his studies. The higher the education level, the more money is needed. It is therefore no wonder that student loans is a very big market being targeted by financial institutions.
The good thing is that the government agencies recognize the hardship a teenager or a young adult has to go through financially to complete their studies. And they have conceptualized programs to help them in this particular area. There are 3 primary types of loans backed by the government.
Perkins
Perkins loans are available via government programs meant for undergraduate students who are facing very tough financial challenges. And because they are targeted to those who are in great financial need, their interest rates are very generous to the borrower. But because the loan quantum can be small compared to other programs, it is not uncommon to find student borrowers with a loan mixed with a combination of Perkins and others.
Stafford
The most common program combined with Perkins loans is Stafford loans. It is basically a government backed program that promises lenders that the student loans they issue will not cause them to lose money. It can either be subsidized or unsubsidized. The liability of repayment solely lies on the student. If a borrower can show that they are in dire financial circumstances, they may qualify for better terms and rates.
PLUS
PLUS loans are different in a way that guarantors or parents can be responsible for repaying the debt. As conventional students loans has restrictions on how the funds can be used, this type of loans can pretty much cover everything else that the student needs. Even though the terms of this can look unattractive compared to the 2 mentioned previously, it can be a huge financial relief for those who are not financially well off. You can expect interest rates to be a little higher on these programs.
If all else fails, go private
The terms of private student loans can look very intimidating when you compare them to the government-backed programs. But let’s be honest here. If you need the money, you need it. Are you really going to deprive your children or yourself from attaining a higher education? Who will you blame if you or your children failed to land those good jobs just because of qualification criteria. It will be too late by then for regret or put blame on someone.
Even though it could be the first time you are looking for such facilities from lenders, remember that common prudence will aid you a long way. Compare with different lender and find the best rates. Negotiate for better terms like there is no tomorrow. And finally have an overall picture of how you will be financially affected instead of only focusing on the short term.