Finding College Loans that Work for You

College expenses have increased dramatically over the past decade. When it comes time for you to choose a college, these expenses will factor tremendously in your decision. A college loan can help you pay for a superior education, so you can enter a profession that will make it easy to pay that loan back.

Here are some things you should know about college loans.

1. Out of all the financial aid given to students each year, 54% is given in loans.
2. You will have access to a higher number and wider variety of loans if your family has less money, because many loans are granted based on need.
3. Other loans, however, are given out based on the desire to help the family pay its share of college costs.
4. Loans that are given out based on need will generally have lower interest rates and offer longer terms of payment.

Here are the four types of federal student loans that are available:

1. Perkins Loans are given out based on need. They only charge 5% interest, and you do not have to make any payments on this type of loan while you are still in school. Only the students with the largest need receive Perkins Loans.

2. Subsidized Stafford Loans are also based on need. Their interest is somewhat higher, with a fixed rate of 6.8% The subsidy you receive is the fact that the federal government will pay for your interest while you are still in school.

3. Unsubsidized Stafford Loans are not given out based on need. However, you do have to pay the interest while you are still in school. You could capitalize the interest, which means you add the interest costs to the loan, and once you graduate, you will owe more money that you would have otherwise, but you would not have to worry about interest while in college.