Not All Loans Are Made Equal

Some people may wonder whether qualifying for federal loans is a good deal

. You figure that debt is debt, and money is money. Besides, you have heard applying for and being accepted for private loans is faster and easier. While it is true any green pay the bills, not each loan is equally emerald.

1. Federal loans - Backed by the American government, federal loans for students are accessible through the school (Perkins loans) and banks and lenders (PLUS and Stafford loans). In order to qualify for the Federal Student Loans, you should fill in a FAFSA form. Advantages of federal student loans take in:

Lower and fixed rates of interest

Numerous repayment opportunities with much longer student loan terms

Less precise credit demands than for a private loan

Also, there are 3 types of federal loans: Perkins Loans (made for students having extreme financial aid), Stafford Loans (designed for graduate and undergraduate students), plus PLUS Parent Loans (made for parents of graduate and undergraduate students).

2. Private student loans - When federal aid is scanty to cover the price of college, lots of students turn to the private loans. In spite of the credit crunch, the private loan market has developed rapidly in past years, assisting to fill the gap between high college expenses and federal aid. When private loans are broadly available, it is wise to consider your options in a careful way before you sign up for one.

Advantages:

You may borrow up to the complete price of your education

You do not need to fill in a FAFSA

Finances may be utilized for any college-related cost

Up to 1 percent reduction on rate of interest for student loans pay directly to the college

Disadvantages:

Subject to the credit check

Much lower credit score raises your rate of interest on the loan

Much higher rate of interest

Rate of interest is variable plus may griw over your loan life

by: Alex LEY

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