For many students who continue or begin their college education, student loans have been necessary due to the fact that tuition and expenses like books are quite costly and necessitate making opportunities for many who are attending a college or university. Typically, students have the option to either borrow from a federal lender or from a private lender, but thanks to applications like FAFSA many students have turned to federal student loans because they can be more affordable.
For the current 2010–2011 school year, student loan interest rates on subsidized federal Stafford loans are around 4.5% while unsubsidized rates are typically around 6.8%. Many students opt for federal loans because of these low rates, opportunities for borrowing can be more available to students who may have a bad credit score or who are returning to college later in life. Federal loans usually cap the amount that a student can borrow depending on their year in school, but again, they are available for the majority of students in most cases.
Obviously, there are private student loan opportunities as well, thanks to a variety of options made available from numerous financial institutions. While there are also affordable opportunities for private student loans, there are, again, students who may be in certain situations that are unable to get an interest rate as low as those offered by federal loans, but in cases where a parent may acquire a student loan or cosign for a student with a private lender, this can be a more affordable option.
It goes without saying that students who are seeking student loan assistance need to weigh both federal and private options, as their situation could make one more cost-efficient than the other. Yet, students have also looked at options for repaying these debts after school as the federal loan program typically has a great deal of affordability options for those who graduate and may have trouble erasing their debt.
While both federal and private lenders usually will have some form of consolidation opportunity for students who may have borrowed multiple student loans, federal loans also offer income-based repayment plans, forbearance options, and student loan forgiveness opportunities in certain cases.
Obviously, similar options may be available from a particular lender, but this again is something that a borrower must research when looking for opportunities to meet their college costs. However, students are often cautioned not to rely solely on student loans as exiting college with a great deal of debt can cause financial strain early in one’s life. It’s understandable that not all students can acquire funding from scholarships or grants that will meet all of their college costs, but seeking out as much funding from these resources as possible will lower the amount that one must borrow and will limit the amount of debt that must be repaid.