How do student loans work and how do I choose the best one?
This never seems to come up in college discussions and I'm a bit lost in the process.
Typically the schools Financial Aid package will incl loans. Note - it is best to receive grants, scholarships that don't have to be paid back. Some schools package loans as part of the aid package but this is money you will have to pay back .
The best are Federal Subsidized loans - Subsidized means the government is paying the interest while you are in school. This saves you money. Its a gift from the government.
Federal Unsubsidized loans are federal loans but interest accrues while you are in school.
If your aid package includes Private Loans it is a strong indicator that it is a school you can not comfortably afford.
Parent Plus loans are Federal loans offered to parents if there is still unmet need. This is a loan your parent would take out on your behalf. They are responsible for repayment.
Also you don't usually get to "choose" the loan unless you get a private loan. There are many providers for private student loans. Their rates are higher and the repayment terms stricter.
Note - These are loans that you will be responsible for. They cannot be discharged in bankruptcy. Be careful that you only get what you can comfortably repay based on what career you are considering. Get an idea of what salaries your chosen field pays.
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