The average cost of attending college during the 2017-2018 school year, was between $20,770 and $46,950, depending on the type of school attended.
With these figures in mind, it’s no surprise that most students rely on loans to fund their further education.
However, when it comes to applying and taking out credit for your school fees, it’s important you’re well educated on the different types of student loan so that you can make an informed decision.
Approximately eight million U.S students receive a federal loan each year.
Federal loans are funded by the government and are the most popular choice of loan for students due to the advantages they offer. These loans are often the most favorable as they have low-interest rates, various repayment options, don’t require a credit check and they can be consolidated when you graduate.
When you review your finances post-graduation, consolidation is a wise option to consider as you’ll only have one repayment to make. Therefore, the process of paying back what you owe becomes simpler to manage.
PLUS loans are another type of federal loan. These loans are awarded to graduate students and the parents of undergraduate students to cover college fees.
However, only biological and adoptive parents are eligible, meaning legal guardians and other relatives won’t qualify.
PLUS loans have a fixed interest rate which is beneficial as you’ll always know how much your repayments will be. Although, it’s important to note that these loans are subsidized.
Therefore, interest will accrue throughout a student’s education.
Private student loans are typically utilized by students who don’t qualify for a federal loan post-graduation, such as law and medical students. You may also choose to turn to a private loan to up your funding if your federal loan doesn’t cover all of your fees.
Similar to federal loans, private loans can be consolidated.
However, 25% of students are unaware that this is possible, according to CNBC. As private loans usually have higher interest rates, it’s advisable to only take out a private loan as a last resort and to always consider your alternative options before applying for one.
Students have a range of student loan and finance options available to them to help them fund their further education.
But before you borrow any cash, it’s essential that you carefully consider all your options and weigh up the pros and cons of each.