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As with any loan option, you should never borrow more than you absolutely need. The two types of student loans are federal and private.
FEDERAL LOANS: These loans account for the majority of educational loans. Either the student or their family can obtain a federal loan. In most cases, a Federal loan will have a better interest rate than a private loan. The two options with a Federal loan are Stafford Loans (subsidized and unsubsidized) and Perkins Loans. Parents who are wanting to obtain the loan for their child, need to look into the Parent PLUS loan. In this situation, repayment can be deferred until after graduation, so long as your child is enrolled in schooling at least half time. Because of the current recession, now is actually a great time to get a loan. Interest rates are extremely low and now is also a good time to refinance any existing loans.
PRIVATE: Private loans are a good supplement to federal loans. Getting one can be achieved through the school or various private institutions. Credit unions are a great source for loans because they have lower rates than most banks. There are an endless number of places to find a private loan including banks, credit unions, and online lenders. AS WITH ANY LOAN, make sure you read and UNDERSTAND the fine print, the repayment terms, interest rate, and anything like an early payment penalty.
MORE OPTIONS TO PAY FOR SCHOOL: Scholarships and Grants are readily available through many different places. A lot of schools have work-study programs to assist students in making money. Most of the time, the student must qualify for one. They can be doubly beneficial because they job/work deals with the student's major and can give them great work experience for their resume, while helping to pay for their college loans.
STUDENT LOAN DEBT CONSOLIDATION OPTIONS: Most students take out more than one loan to cover college debt, by the time graduation comes, most graduates have several loans to begin repaying. Consolidation is a great tool for getting all your loans bundled together. This makes things easier so that you only have a single payment,and possibly reducing some of the interest rates. Consolidating can help you lock in a fixed interest rate.
REPAYMENT PLANS:
Standard Repayment: Lowest total loan cost. Repayment varies from 10-30 years. Minimum monthly payment is typically $50 a month (this is depending on how much is initially borrowed).
Extended Repayment: This option spreads out your loan repayment over a much longer time period, making your monthly payments lower. Sometimes options are available to just be able to pay the interest only for the first 2-4 years. Remember, spreading out the payments will cause you to pay much much more by the end of the loan. Eligibility requirement is that you have a balance of more than thirty thousand dollars.
Graduated Repayment: With a graduated repayment plan, your monthly payment starts low and gradually increases every so often. Usually your payments start with you just paying the interest on the loan. They then increase to cover the tinerest and more and more principle as time goes by. A graduated repayment plan is a awesome option for the student who won't be making very much money to start, but will see better paying jobs and making more money after a few months or years. Most times, you will pay more money in the end than a standard repayment plan, but you can also pay additional principal if you can afford it to help reduce the length of the loan and the number of payments.
After you graduate, you should make sure you look into all benefit packages that your employer has. There are a lot of employers who will help pay for some of your student loans. Many times if you are employed with that company, they will pay for the schooling while you are employed and attending classes.
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