Credit Score Not Essential To Obtain Student Loans

Attending college is very important in today’s society.  If you want to find a high-paying job, you need to show employers that you are a dedicated individual that took time to get their degree.  Pursuing a degree can be challenging and expensive if you do not have money set aside to pay for your tuition.  While most two-year and four-year institutions offer federal financial aid packages, these awards are not nearly enough to pay for your housing expenses, books, and tuition.  If you have reviewed your financial aid package and you know you need more money to make it through school, it is time learn about student loans.  There are several types of student loans out there.  Learn which ones you might qualify for and live comfortably through school.

Credit Score and Student Loans

If you do not need a large sum of money, you may want to start with Federal loans.  Federal loans are the safest and most practical choice for adult students and students who are just exiting high school.  Unlike conventional loans offered by private lenders, federal loan interest rates do not change over time and the interest charged is not determined by your credit score.  There are currently three types of Federal loans available to undergraduate and graduate students:

Start With Federal Loans

Perkins and Subsidized Stafford Loans –  If your school offers subsidized loans and you qualify for this type of loan it is the best option for you.  If you qualify for these student loans, the government will pay for the interest that accrues while you are in school.  The Perkins Loan interest rate is fixed at 5 percent when you are out of school and the Stafford loan is fixed at 6.8 percent or less depending on the market.  You will appreciate that the government pays the interest because you will save thousands of dollars so you can pay off your student debt faster when you are employed.

Unsubsidized Stafford Loans –  These loans are the next best option if you do not qualify for the subsidized loans or your school does not offer the prior option.  Unsubsidized Stafford Loans are available to anyone regardless of their income or credit rating.  The interest will build up while you are in school at fixed interest rates that are listed on your loan contract.  You do not have to start making payments to your loan until 6 months after you leave school.

PLUS Loans –  If you are a graduate student or you are a dependent, you may qualify for a PLUS loan through the federal government.  PLUS loans have have an interest rate of 8.5 percent but they are easier to qualify for than private student loans and have higher loan limits than the others.

Qualifying for Private Loans When Federal Loans Are Not Enough

The loan limits for first and second year students cap off at $3500 per year when you apply without a parent.  The limits will rise to $4500 for students with 24 credits or more behind their belt.  While these funds will help you in a time of need, they may not be enough to eliminate the need to work through college.  This is where private loans come into play.  Private loans are loans that are offered by lending institutions and banks who are making a profit off of the interest you pay.  These alternative loans are much riskier than federal loans and do not offer as much protection as a federal loan.  If you start at a time where interest rates are low, it is possible for your interest rates to rise while you are in school.  Make sure you always apply for federal loans first and then get the additional funds you need through an alternative loan.

If you are attending a state university or a private school, the last thing you want to do is balance work and school.  Put all of your focus on schooling by applying for student loans to pay for your cost of living so you can succeed in school.  Make sure you apply for scholarships and grants before you apply for money that must be repaid.  Follow the tips above and choose the safest loan package that will help you get through school.