All About Student Loans

Did you know 40% of students now graduate with what lenders consider "Unmanageable Debt." Meaning there student loan payments eat up more of their salaries that is considered financially sound. According to the National Center For education, the average student loan debt is $10,000 and the average cost of college increases is twice the rate of inflation. So going into college you need to know all the facts and plan for it financially. Know the loans you are going to take out, their interest rates, when you have to pay them back, and where you can get help paying them back. Most all students now are relying on student loans to get them an education.

Student loans have low interest rates and require no credit checks, these loans also offer deferment options and repayment terms. Two examples of student loans are the Stafford Loan and Federal Perkins Loans.

The Stafford Loan is the main loan and has two different options. The Federal Family Education Loan Program, this loan is provided by private lenders, bank, credit unions and savings and loan associations. These loans are also guaranteed against default by the federal government. Then there is the Federal Direct Student Loan they are giving to you directly by lending schools which are provided by the U.S. government, directly to the student and or the parents. So, all Stafford Loans are either subsidized or unsubsidized - subsidized is where the government pays the interest while you are in school.There is a repayment plan of ten years with a fixed interest rate of 6.8%. Unsubsidized you pay all the interest with deferred payments till after you graduate, repayment begins 6 months after the date of graduation. These loans are fairly easy to get with simple steps, first you apply using a Free Application For Federal Student Aid (FAFSA).

The Perkins Loan is awarded to undergraduate and graduates with exceptional financial needs. There are no origination or default fees, and the interest rate is fixed at 5%. There is a 10 year repayment period.

Now these loans are pretty much needed if you are a student wanting to go to school and finish, there will be a lot to pay back. It is very hard as, you read in the first paragraph. There is help for those who just can't seem to make the payments. (IBR) Income-Based Repayment Plan this is a repayment plan for major types of federal student loans that caps your required monthly payment at an amount intended to affordable. This amount is based on your income and family size, there are however disadvantages to the IBR. One disadvantage is your interest could be higher and the other disadvantage is you must complete and submit annual documentation to set your payment each year.

The point I hope you get from this is research always research, rather it be student loans, applying for house loans, or credit cards. Make sure yo know what you will have to pay each month or what you you can afford to pay each month. Always see what kind of help is out there to help you pay back a loan so you do not get into a debt crisis.