If you, or perhaps a close family member, are extremely well-off, you can save yourself some time and stop reading right now. 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 several reasonable choices among available loans for school. But first let's discredit 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. Realistically, you have to have them to function in our society. 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 destroy you with onerous interest rates, late fees and over limit fees. Another terrible source of funds is check cashing stores. When you look at the cost of borrowing from them as an annualized rate, you won't believe your eyes! 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? Stay clear of these places! What about gambling? There are plenty of exciting 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, this is just a really bad habit to get into. Don't count on it to pay your tuition. Another character in our rogue's gallery is the title loan, which requires you to sign over your car title as collateral. Expect to get just a fraction of your car's value, while paying a high rate of interest. All too often, the borrower is unable to keep up with the payments and ultimately loses the car. If you are willing to give up your car for much less than what it's worth, why don't you just sell the car and bank all the cash? At least you'll earn some interest instead of paying it. Some Better Choices Once you have exhausted your possibilities for getting scholarships or grants, you'll need 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 consumer-friendly types of loans for school. We can divide these into two categories: private student loans and government guaranteed loans. Private loans are funded by 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. Federal loans for school are generally available at lower interest rates, can be repaid over a longer period of time, and offer the option to consolidate them after completion of college. Among the government loans are three categories: Perkins loans, Stafford loans, and Grad-PLUS loans. Grad-PLUS is short for Graduate student and Parent Loans for Undergraduate Students. While each of these programs has its own rules, they share some similarities as well. At ExploreStudentLoans.com we discuss each of these loans in greater detail. One thing they do have in common, though: you must show a need for the money to be eligible 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 qualifications. Should You Get a Scholarship or a Student Loan? Sorry- that was a trick question. The correct answer is, if possible, get both. A scholarship or grant is far better than a loan. You just might be surprised at how much you can get in grant money that you'll never have to repay. Loans for school are able to fill in the gaps when you can't get enough of the free money. Try to keep student loans to a minimum, though, and pay them off as rapidly as possible to keep your interest expense to a minimum. A final word of caution is in order here. If the starting pay in your chosen career is relatively low, try to avoid taking out more loans for school than absolutely necessary. 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. If you practice frugality now, you'll thank yourself for it later.
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