Kay Said:

What are the best student loans?

We Answered:

Always begin your quest for educational aid with the federal government's financial aid program. By completing the Free Application for Federal Student Aid, or FAFSA, you will automatically be considered for many forms of financial aid - not just from the federal government, but from your state and from your college, too.

The federal government has several forms of aid that assist applicants who have "exceptional need". Your need classification is determined by the information you provide on your FAFSA. If you qualify for need-based assistance, you may receive a gift of "free" money from the federal government, you may receive a deeply discounted loan, or you may be offered the opportunity to take on a part-time job that will help pay for your education.

The federal government has important aid programs for students who do not qualify for need-based aid, too - primarily the Stafford Loan program. The Stafford Loan is the best educational loan that you can get from anyone who isn't your rich and adoring grandmother.

The Stafford loan offers a low, fixed rate of interest that remains the same until you repay the loan in full, it doesn't require a credit check or a cosigner, repayment doesn't begin until after you finish college (or drop out), and you can request a temporary postponement of your payment obligation if you experience financial difficulties during your repayment.

If you're a smart and financially conservative school "shopper", one of THE most important factors in selecting your college will be the cost of attendance. Federal financial aid will provide you with a large chunk of what it might cost you to attend a local community college, or a cheap in-state public university - or - federal financial aid will cover a tiny portion of the cost of attending a fancy, big name private school, or out-of-state university. If your have plenty of other funds available to you, then you have the exciting privilege of being able to attend just about any school that appeals to you.

You need to understand that you'll get the same amount from the financial aid program if you choose to attend $8000 a year Local College, or $50,000 a year Big Name University. If you choose Big Name, you may need to come up with $40,000 or more out of your own pocket.

Students who need funds above and beyond what they and their parents can afford - and what they receive from the federal government, often turn to private educational loans. "Private" means only that these aren't government loans.

Private loans are ALL variable interest rate loans, and it is highly unlikely that any student applicants have the credit history or the income to qualify for a private loan without a cosigner.

Cosigners are extremely hard to come by - as they should be, because a cosigner is basically an idiot - and I mean that in the nicest possible way. A cosigner is completely 100 percent legally liable if the borrower can't pay, won't pay, or dies before he/she can pay.

There are no "low" interest rates on private educational loans - they are all tied to either the prime rate or the similar LIBOR (London Inter Bank Offered Rate). A typical loan is something like "Prime plus 4", which means that your interest is determined by taking the prime rate and adding four percentage points. The prime rate is near a historical low of 5 percent right now, but in the last 30 years, it has been as high as 21.5 percent. When you take out a variable interest rate loan, the interest rate "resets" several times a year, and that's the interest that you'll pay until the rate resets again. Imagine paying 25.5 percent interest if the prime were to return to its cyclical highs during the 15 years you'll be paying off these private educational loans.

Private loans are almost never a wise financial choice, unless you are in professional school (law, medicine), and you can anticipate a very healthy salary when you are done. The wiser choice is to choose your school carefully, so you won't need to borrow beyond your personal resources, and whatever assistance you can get from the federal government and your school.

Good luck to you - I hope that helped.

Cynthia Said:

What are the best Student Loans?

We Answered:

no one can answer this question , because everyone has different financial situations , i go with your Dad and believe
what he will do the best for you , no one can better than your own family ,