| Thinking about getting a student loan to help pay for | | | | (Free Application for Federal Student Aid). The |
| your college education? You're not alone. About | | | | Department of Education will then complete a SAR |
| two-thirds of all people attending public and private | | | | (Student Aid Report) and this is sent to the |
| colleges and universities take out student loans. This | | | | institutions to which you applied for admittance. |
| is a necessity because the cost of higher education | | | | These institutions will then determine your EFC |
| has soared in recent years. The Project on Student | | | | (Expected Family Contribution). This is used to |
| Debt reports that for 2007 graduates, the average | | | | determine how much federal student aid would be |
| student borrower graduating from a private institution | | | | available to you. The difference between the amount |
| had a student debt of $25,700, and the average | | | | of loans you can secure and the total cost of your |
| graduate borrower in a public institution has a debt | | | | schooling is the amount that you and your family will |
| burden of $19,400. | | | | have to come up with. PLUS loans (Parental Loans |
| What Is A Student Loan And Why Did Student | | | | for Undergraduate Studies) are federally backed loans |
| Loans Come Into Being? | | | | available to the parents of students, and about 10% |
| These might seem like simple questions, but the | | | | of student families take out PLUS loans to help |
| mechanism is quite complex. Obviously a student loan | | | | supplement college costs. |
| is money that is lent to a student to pay his or her | | | | Some Basic Advice |
| expenses while pursuing a course of study at an | | | | After leaving school and starting your work career it |
| institution of higher learning. These expenses include | | | | will be time to start paying back your loans. |
| room and board, tuition, text books, perhaps travel | | | | Whatever you do, do not default on your student |
| to and from school, and other student fees and | | | | loans. If money gets tight you can change your |
| expenses. The complexity arises because most | | | | repayment plan to have lower payments. In some |
| students are young and have not established a credit | | | | cases you can defer payments for a while. You |
| history which would enable them to get a loan. Also, | | | | might even qualify to have some of your debt |
| the repayment schedules can last very long, | | | | forgiven if you go into the military, public service, |
| sometimes as long as repaying the mortgage on a | | | | work for a federal agency, or are employed in |
| house, for example. Essentially the student and the | | | | certain healthcare jobs. But in any case do not |
| creditor are betting that with the degree earned in | | | | default on your student loans because if you do you |
| college the student will earn more money in his or her | | | | will lose some of your options, not to mention |
| profession than he or she would without the degree | | | | creating a bad credit rating that will make your life |
| and that with the proper repayment terms the | | | | difficult for quite a few years. It is truly a shame that |
| student loans will be affordable for the student for | | | | about 20% of student borrowers reportedly have |
| the life of the loan. Student loans can be government | | | | delinquent loans after only 3 years of loan |
| backed loans or private loans. All students should | | | | repayments. You should make an effort to know |
| start their loan search by applying for government | | | | your repayment options and avoid being part of that |
| backed loans before looking at private loans. | | | | 20%. |
| Government backed or federal loans have many | | | | Can I Get Out Of My Student Loans By Declaring |
| advantages that private loans do not. | | | | Bankruptcy? |
| How Do I Apply For A Student Loan? | | | | No, neither federal nor private student loans can be |
| After sending in an application to one or more | | | | dismissed if you declare bankruptcy except under |
| colleges and universities, you must fill out a FAFSA | | | | very rare instances, so that is not a real option. |