| Most people need some sort of outside funding to | | | | flexibility of repayment you're allowed. If you'd like |
| help pay for their college education. When looking for | | | | you can arrange for your loan to be a 10, 20, or |
| student loans, you have two choices. You can apply | | | | even 30 year loan, which will lower your monthly |
| for federal loans which are backed by the | | | | payments and make them more affordable. |
| government or you can seek money from a private | | | | Private School Loans |
| lender. | | | | Perhaps the best part of private school loans is the |
| Each method comes with benefits and drawbacks, so | | | | ability to apply for one whenever the need arises. |
| it's hard to say which one is better. This article will | | | | With federal loans you have to fill out the required |
| explain the benefits of each and help you decide | | | | paperwork ahead of deadlines in order to receive a |
| which is right for you. | | | | loan for a given semester. When requesting private |
| Federal School Loans | | | | loans you can apply at any time. |
| Federal school loans are government regulated. This | | | | Another great thing about private loans is they can |
| means that the lenders have to abide by strict rules | | | | be used for fringe school expenses, such as books |
| when it comes to repayment terms on your loans. | | | | and transportation. Federal loans must be applied to |
| For example, interest rates on federal school loans | | | | specific expenses, such as tuition and room and |
| are set at a ceiling by the government and the lender | | | | board, but private loans can be used for just about |
| cannot exceed that rate. They can go lower than | | | | anything not covered by federal loans. |
| that, and in some cases they do in order to stay | | | | Private loans are not need-based, either. This means |
| competitive with other lenders, but they must stay | | | | that no matter your or your parent's financial |
| below the max. This is good for the borrower | | | | situation, you are eligible for private loans. Financial aid |
| because when they take out a federal loan they | | | | and many federal loans consider your financial need |
| know what to expect with their interest rate. | | | | before you receive money, and sometimes the |
| Federal loans are typically fixed rates as well, which | | | | amount is reflective of your need. Private loans, on |
| means the interest rate is set at a specific | | | | the other hand, will give you the amount you |
| percentage and won't change for the entire life of | | | | request, provided you meet their credit check criteria. |
| the loan. Fixed rates mean there won't be any | | | | Which is Better? |
| surprises in your payments from month to month. | | | | Which type of loan is better depends entirely on |
| They should be almost exactly the same each month. | | | | your personal situation, however, knowing the facts |
| The interest you pay on your loans each year on | | | | will help you make the best choice for you. This |
| federal loans is tax deductible, too. If you owe a lot | | | | article addresses some of those facts but be sure to |
| of money, you can claim a nice chunk of your | | | | discuss the options with your school financial aid |
| payments as deductions. | | | | office as well. |
| One final advantage of federal school loans is the | | | | |