When you apply for financial aid you may be offered loans as part of your financial aid offer.
If you have to borrow money, federal loans should be your first choice. Federal loans are offered at a low interest rate, and there is a grace period, meaning you have time after graduating before you have to start repaying. There are two basic types of Federal loans:
The US Department of Education will pay interest on your loan while you are enrolled in school at least half time, for the first six months after you leave school and during a period of deferment.
You will be responsible for paying the interest that is charged to your loan while you are enrolled in school, as well as the original amount you borrowed.
Parents may also borrow money to help pay for their student’s education through the federal Parent PLUS loan program. Like federal student loans, Parent PLUS loans offer lower interest rates than loans from a bank.
If you do not receive enough federal or institutional aid to cover the cost of your degree, you may have to take out a private loan. Private loans should be a last resort because they tend to have high interest rates and might require payment while you are still in school. Make sure you have exhausted all other avenues of aid. You must apply for private loans separately – they are not included in the FAFSA. Use this comparison chart of the major private loans available to compare interest rates, term limits, and award limits. You can also visit ClarifiCollege.org and check out their loan calculator. This calculator will help you borrow responsibly.