By M Katie Helle, CPA –
With the rising cost of a college education, many students turn to student loans for help. A student loan is a sum of money you borrow for your education and pay back over time. Student loans are unique loans in that you have the option to defer payments while you are going to school. They will however continue to accrue interest while in deferment.
There are numerous ways to acquire a student loan. The most common way is to apply while you are completing your annual Free Application for Federal Student Aid (FASFA). Loans acquired from the FASFA filing are monies loaned by the federal government. There are several types and amounts of government student loans you can qualify for. If you are not eligible for federal loans, you can also acquire private student loans. These monies are typically loaned by a bank or credit agency. These are handled similar to that of a car loan – in that there is an application that needs to be completed and approved.
When applying for student loans, it is important to know exactly how much money you will need to ensure you take out loans for only the amount you need. Although you can get student loans for other expenses such living expenses, a best practice is to get a loan only for the cost of your education. The lower the student loans the easier it will be to repay over time.
Before taking out debt for your education, it is important to do research to fully understand the benefits and consequences of student loans. A helpful website to visit is Federal Student Aid.