|Option 1 Credit Union 8-6
Sunday, April 12, 2009
In these post-mortgage-meltdown days, when a new financial crisis seems to loom daily, it still is possible for young people to get the loans they need for college. When it comes to federal loans, recent legislation has helped keep funds available. If you need private loans as well, those are harder-and more expensive-to get than in the past.
To apply for federal aid, you'll need to complete the Free Application for Federal Student Aid (FAFSA) (fafsa.ed.gov). After you submit the FAFSA, your college will tell you what school aid and federal financial aid is available to you.
Your first step should be to contact your college's financial aid office. They'll help ensure you get as much free money-grants and scholarships-as possible before you borrow. And they'll ensure you get as much in federal loans as possible. You can, and should, also search for grants and scholarships from other sources.
Federal loans are the cheapest, and in some cases the government subsidizes the loans by paying the interest while you're in school. You also can defer payment of federal loans while you're in school, and even after graduation under some circumstances, such as a job loss. You can use extended payment plans, too, if necessary.
Lower-income students can get Perkins loans, and any student can get Stafford loans, regardless of their credit records. Parents of undergraduates can borrow through the federal PLUS loan program. PLUS loans require a credit check, and lenders have tightened their credit criteria. They're still easier to get than private loans, though, because the law includes provisions for parents who have fallen delinquent because of medical bills or certain other circumstances. And if a parent is denied a PLUS loan, the student can get additional Stafford money.
After exhausting those possibilities, check with your financial institution to see if they provide private loan options. Federal loans have annual and lifetime caps, so they may not cover the entire cost of your education. Private loans can fill the gap.
Article provided courtesy of Option 1 Credit Union. Copyright 2008 Credit Union National Association Inc. All rights reserved.