|By Jill Harkins, Pittsburgh Post-Gazette|
"I think student loans have become a part of life. You just have to come to terms with it," she said.
Undergraduate student loans are as common as
The first step in seeking a loan is submitting as early as possible the Free Application for Federal Student Aid, known as the FAFSA and available online at fafsa.ed.gov. This form, which is free to file, is required to receive federal student loans, typically the lowest cost option.
Federal loans are preferable over private loans from banks or other financial institutions because their interest rates are lower and the repayment process is more lenient.
Each type of federal loan has its own conditions and limits.
Federal Perkins loans offer the best deal, with no interest accumulating while in school and a low fixed interest rate after graduation. These loans, which always have an interest rate of 5 percent, are offered only to extremely financially needy students and are generally distributed to students on a first-come, first-served basis.
Eligible students can borrow up to
The next best option is federal
Unsubsidized Stafford loans are offered to students of all income levels. Interest accumulates on the loan while the student is in school.
The amount that can be borrowed in
The cumulative limit on
Parent PLUS loans currently have an interest rate of 7.21 percent.
Such loans are unlimited up to the cost of the institution minus other aid already received, but they have a less flexible repayment than the other federal loan programs do. If parents are denied a PLUS loan because they fail the required adverse credit check, the student becomes eligible to borrow an additional
Once all federal options are exhausted, students then can consider whether private loans are appropriate.
Private loans in the parent's name usually have lower interest rates than private loans in the student's name, which
If private loans are necessary,
The high monthly payments have kept him from such luxuries as an apartment without roommates.
He isn't the only one affected: His older sister,
Private lenders require co-signers for about 90 percent of undergraduate applicants.
Just because loans are available doesn't mean the student needs to use them.
Howard Hair of
This presents a problem for financially independent students with desired professions that aren't particularly lucrative.
"In 20 years, your kids will need loans, and you'll still be up to your eyebrows in debt and won't be able to help them. It affects the next generation," said
It also can affect the student's ability to obtain a mortgage or buy a car.
Accepting whatever aid is offered and deciding to worry about it later may be the easy route now, but
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