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Student Loans

Few people nowadays can afford to foot the bill for an entire college education from their own pockets, unless they are unusually deep. While scholarships and grants can help, they're not always enough to cover the expense of college. Sometimes taking out a loan can help to shoulder the rest of the financial burden.

Unlike grants and scholarships, loans do eventually have to paid back. Most student loans don't require that the borrower begin making payments until after graduation, hopefully after you've secured a good post-graduation job. There are a few major types of student loans — Stafford, Perkins, PLUS, and direct loans. Also, later on if you need to simplify your payments on your loans you can obtain a consolidation loan from a bank.

Stafford and Perkins loans are federally based and do not require credit checks or any form of collateral for the student to apply for. Government loans such as these can offer low interest rates as well as repayment deferment plans to allow you more flexibility. Stafford loans come in two forms — Federal Family Education Loans, which are provided through private lenders such as banks, credit unions, and loan associations; and Federal Direct Student Loans which are provided directly from the government to your college. Stafford loans can either be subsidized, meaning the government pays your interest while you're in school, or unsubsidized, meaning you pay the interest. Perkins loans are usually reserved for those with exceptional financial need. Your school will act as your lender, using funds provided by the government. Perkins loans are subsidized, with no interest being paid while you are in school and also for a nine month grace period afterward.

PLUS loans are slightly different in that they can be taken out by the family of the student to supplement any aid the student might be receiving. They are slightly less advantageous than the student-based loans in that they do require credit checks and don't come with the grace periods that Stafford and Perkins loans provide.

Loans through private lenders are available as well if government loans don't suit your needs. Eligibility for these kinds of loans depend on your credit score. These can be more expensive than federal loans, but sometimes federal loans simply don't provide enough money. Fortunately, student loan interest rates have a maximum placed on them by the federal government. Also, rates are often lower than this due to competition between lenders. Often, loans through the federal government can offer better interest rates and payment plans than commercial lenders. It can be to your advantage to check out a variety of lenders to get the best rate.

Before you take out a loan, do consider how you will repay it. After all the interest is calculated, it may end up costing you more than you think. Depending on your field of study you might be eligible for loan forgiveness programs where your debt can be paid off through volunteer work or military service. Before you ever consider defaulting on a loan, make sure you've pursued all your other options. Whether you're racking up some serious loan debt in medical school or just need some help getting your cosmetology certification, there is a loan out there than can help you get the money you need for your education.