Do Not Be Afraid: Federal Student Loans Work!

Hello Students!

I have decided to continue with the theme of paying for college, and to discuss what most feel is a last resort:  Student Loans.

I know one of the goals in attending College is graduate with as little debt as possible.  Sometimes, sadly, Financial Aid cannot foot your entire bill, and you are left with little to no options.

The goal of this post is to explore the Student Loan option as a viable option for you students to pay you  tuition, and that Student Loans and the debt is not as abad as it sounds.
Federal Loans

When you have filled out your FAFSA and you receive your Financial Aid award from your school, you are likely to see one, if not two, of the Federal Loans that are offered:  The Perkins and the Stafford Loans.

Though these two loans are provided through the government, they do function differently and understanding how the function differently can save you hundreds, if not thousands of dollars!

The Federal Perkins Loan
This Loan, in my opinion, is the best option for you students to take advantage of.  I actually am taking advantage of this loan for my own Education now.  Here is what the Loan offers:

• Fixed interest rate of 5% 
• 9-Month Grace Period after graduating (or dropping below full-time student status)
• Subsidized interest (this means no interest is charged while you are in school!)
• Offers up to $5,500 per student per year

*What this all means: Though the Perkins Loan does have an interest rate, you will not be charged that interest until you begin paying back the loan.  You do not have to pay back the loan until nine-months after you graduated college!  The Grace Period is so you can find work after school and begin to make your money.  The Perkins Loan also has the lowest interest rate you will find when it comes to student loans.

The Stafford Loan

Although I said before I prefer the Federal Perkins Loan, the Stafford Loan still has beneficial qualities that can help you students pay for your Education.  Here is what the Stafford offers:

• Fixed, low-interest rates (though these rates vary)
• 6-Month Grace Period after graduating (or dropping below full-time student status)
• Subsidized and Unsubsidized loans (this varies with each student)
• Offers a variety of aid depending on each student

*What this all means:  The Stafford Loan is another great option to cover unpaid expenses.  However, the loan can be subsidized, meaning you do not pay interest while in school, but only if you are determined by your school to be in need of it.  If not, then you can apply for the unsubsidized, which means the loan will collect interest while in you are in school.  Though this seems like a lot of interest, it is worth exploring since college is worth it.

My closing note on Student Loans is this:

Yes you don't want to leave college with any debt, especially a lot of debt.  According to this CNN article, in 2012 undergraduate students left college with $27,000 in student loan debt.  That is a lot of money.  However, if not for those student loans paying for your schooling, what would you do instead?  Consider the student loan, and debt, as an investment.  You have to put in some to get something out.  That $27,000 in debt gives you more options than you would have had without it.  You can have a career, have a better life, and be an educated person because of that investment.  This is how I see my debt.  I was nervous about it at first too, but the more I thought about, I realized I would do the same thing all over again.