Best Student Loans

Okay, so you've completed all the necessary documents, letters of reference and essays required for entrance into the college of your dreams. Now the only thing that stands in way of completing your post secondary education is where you will get the money.

For a good number of students obtaining the financing to complete their education the only option available is to borrow the money. This is where things can get a bit tricky as there are many lending organization vying for your business. The key is to select the best lender for your needs and in order to do that, it is imperative that you are fully aware of the type of student loan you want and, more importantly, the repayment plan that suits your lifestyle.

For the most part, the best strategy for the average college student is to try to get a federal loan. Federal loans carry a fixed interest rate, are relatively simple to apply for and provide flexible repayment terms. In some cases, federal loans also offer government subsidies to help pay down some of the interest.

One of the most popular federal loans is The Perkins. This loan provides students up to four thousand dollars a year for higher education at a fixed 5% interest rate. The federal government will pay the interest until the loan comes due (usually 6 months after you leave school); however, there is an option available to defer repayment for an additional nine months after school has been completed. Plus, there is an option to spread the payments over two years. Students who work as teachers or social workers in low income neighborhoods after graduation may also qualify for loan forgiveness.

Naturally, this type of loan can be a scarce as hen's teeth because of its appeal, so if you qualify for a Perkins loan you should take full advantage of it.

The next best available type of student loan is called The Stafford. With its 6.8% fixed interest rate it is certainly not as good a deal as the Perkins, but it does beat out the recent prime interest rate of 8.25%. Some Stafford loans have a variable interest rate which is adjusted every July based on the ninety one day Treasury bill as of the end of May. Stafford loans allow freshmen to borrow $3,500 a year, sophomores $4,500 and juniors and seniors can get $5,500 annually.

Students, whose families qualify for need-based aid, may have the government pay the interest on the Stafford until its due date. All others have interest accumulating from day one. As with the Perkins loan though there is an option for repayment deferral (for six months after graduation) and you may also apply to have this loan extended from the original ten year repayment plan to as many as 25 years. You can also lower your monthly payments; however this does affect the overall cost of the loan.

As with any other financial commitment it is imperative that you follow through on repayment of student loans.

Under some special circumstances, Stafford loans can be forgiven but this decision is based on particular financial situations.