Loans For School: Finding The Right Student Loans

If you recently won the Lottery or got really lucky in Las Vegas, this article is not for you. Most students, though, come to realize that they need to find good loans for school to pay the tuition fees and expenses that were not covered by savings, grants or scholarships.

In a moment we'll discuss some pretty good choices among available loans for school. But first let's throw out some really bad choices that many students have made.

Some Poor Choices

First off, since they are so widely used: credit cards. True, they are quick and convenient. Also they can help you out in a pinch. The fact is, you need them just to function in today's economy. Have you ever tried buying something online, or renting a car without one? But seriously, for financing your tuition? Only consider them if you have a rock-solid plan to pay them back. Otherwise, credit cards can bury you with ridiculous interest rates, late fees and over limit penalties.

Check cashing stores are another really poor source of money. When you look at the annualized interest rates they are charging, it will take your breath away! Seriously, if you use these often enough you may never recover. Be honest with yourself, if you don't have the money right now, what makes you think you'll have it in 2 weeks? Keep away from these places!

What about gambling? There are plenty of appealing games: cards, roulette, slots, dice, horse/dog races, and of course the lottery. For the casino owners, gambling is a lucrative business. For you, though, gambling is just a really bad habit to get into. It won't pay your tuition. Don't waste your time (and money).

Another character in our rogue's gallery is the title loan, which requires you to sign over your car title as collateral. Typically, you will only get a fraction of the car's value, and the interest rate is quite high. Many borrowers then find they are unable to repay the loan, and lose their car. If you are willing to give up your car for much less than what it's worth, why not just sell the car and bank all the cash? At least you'll earn some interest instead of paying it.

Some Better Choices

Assuming you have made every reasonable effort to get scholarships and grants, it's now time to shop for the student loans you'll need to cover all the rest of your expenses. So let's have a look at some of the more reasonable types of loans for school.

Basically, these fall into two categories: private student loans and government guaranteed loans. Private loans are available through banks and other institutions. These loans generally carry a higher rate of interest than the government loans. Every lender has its own rules. In many cases you will need a cosigner, and/or a high credit score to qualify for a private loan.

Government guaranteed loans for school usually offer lower rates, longer payback schedules, and the option to consolidate loans after graduation. A consolidation loan could lower the overall interest rate as well.

There are three categories of government loans: Perkins loans, Stafford loans, and Grad-PLUS loans. Grad-PLUS is short for Graduate student and Parent Loans for Undergraduate Students.

These three have some various rules, but also share several similarities. At ExploreStudentLoans.com we discuss each of these loans in greater detail. One thing they do have in common, though: you must show a financial need in order to qualify for the loan program. For all of these, you will need to submit a FAFSA (Free Application for Federal Student Aid) form to verify your eligibility.

Should You Get a Scholarship or a Student Loan?

Well, DUH! Who doesn't like free money? A scholarship or grant is far better than a loan. If you can qualify for one or more of the many scholarships and grants currently available, by all means, go for it. Loans for school are useful to fill in the gaps when you can't get enough of the free money. Try to keep those loans to a minimum, though, and pay them off as rapidly as possible to minimize your interest costs.

And finally, be cautious about using loans for school if your chosen career will begin at a relatively low pay grade. If that is the case, you may want to consider working part time to "pay as you go" for your expenses. Many students have graduated with a debt load that proved to be a heavy burden to carry for years. You can voluntarily practice frugality today, or find yourself forced to be frugal tomorrow. The choice is yours.