An Overview of Student Loans

Student loans are typically used to fund a college or post-grad education. When you’re trying to finance an education, there are several different types of aid available. How to finance college education is an important decision – and in addition to typical student loans, there are other types of financing options available.

Some student loan options:

Federal loans

After scholarships and grants, federally guaranteed student loans are a popular option. These are the most common federal student loans:

1. Stafford student loan — A popular student loan, it can be interest-free during school years for those who qualify for a subsidized version. Unsubsidized student loans charge interest right away—but you don’t need to demonstrate financial need, or a credit history either.
2. Perkins student loan — An even more attractive student loan, the Perkins loan features a low fixed rate, which isn’t charged until months after the student leaves school. Unfortunately, these student loans feature low amount limits.
3. Parent Loans for Undergraduate Students (PLUS) — These student loans are actually parent-of-student loans—so they may be harder to qualify for, more expensive and need to be repaid sooner. Still, rates and terms are generally found to be more affordable than private student loans.

Private loans

Private loans are non-federally guaranteed student loans. Like many federal student loans, they’re available from most banks and credit unions.

Naturally, since private student loans aren’t guaranteed against default or subsidized, they’re typically higher priced. What’s more, parents usually have to co-sign student loans. This means that the co-signer takes responsibility for the loan in the event that the borrower (the student) doesn’t repay the loan.

Home Equity Loans

Homeowners with available equity often tap into their home equity assets to pay for their kids’ college education. At the top of the list of student loan alternatives:

• Cash-out refinance loans
• Home equity loans
• Home equity lines of credit (HELOC)

Looking for financing alternatives to pay for college education? Want to find if you can borrow against your home equity to pay for college? Call us at 1-888-284-7596 for a FREE, no obligation consultation.