A student loan helps you get through college.  Then you
come out into a high-paying career.  It's a great
investment in your (or your sons/daughters) future.

Student loans generally give you a good deal.  You get
below-market interest rates, and you get a $2500 federal
tax credit on interest paid over any period of time
(previously first 60 months only)

It doesn't matter if the student, or parent takes out the
loan; tax deduction remains the same.


* Did you know the federal government has a $50 billion
student loan program ?

Not surprisingly, the federal government provides the
largest percentage of student loans.  Other student loans
may come direct from colleges, private lenders or state
governments.

One of the key advantages to a federal guaranteed loan is
exactly that - it's guaranteed.  That means you don't need
collateral.  It also means the terms are kinder than a
typical lender might offer.  Of course, your educational
program has to be approved by the government.



Types of student loans


* Federal Stafford Loan - for undergraduate or graduate
students

A popular and cost-effective source of a student loan.
Stafford loans provide low-interest, government guaranteed
funds.

Stafford Loans come in two types, subsidized or
unsubsidized.  Whether or not you're eligible for
subsidized depends on household income. The school ought to
advise on this. 

For subsidized, the government covers the interest right up
to start of repayment i.e. they pay interest incurred
during the course, in deferment and during the grace period
before repayment begins.  If you qualify for subsidized,
it's a great deal

For unsubsidized, the student must pay all interest
incurred at all times, though they don't start repaying
until after grace period.


* Federal PLUS Loan - for parents of undergraduates

Parent Loan for Undergraduate Students (PLUS) allows
parents to take a loan on their Childs behalf.  They can
contribute to their Childs future, and get a great low-
interest loan with continuing future tax relief.

PLUS actually allows parents to borrow the total cost of
their child's education, minus any grants or other
financial aid awarded.  All tuition fees, meals, books,
transport etc. can be included in the loan.

This really is a great deal, and has no income or asset
requirements.  Even poor credit history may be overcome.
Repayment is flexible, and can include zero payments for up
to 4 years.

Only one drawback to the Federal Stafford and Federal Plus
loan - your school must be approved to participate in these
programs.  If your school isn't approved, then you've got
some other options...


* Banks

Many banks offer unsubsidized Stafford loans.  You still
get the money, which you must have to attend college, but
repayment options are more limited.  Some deals offer you
an interest rate reduction if you make payments on time.


* State Loans

Most states offer guaranteed student loans.  Apply direct
to Banks, who'll administer the State program.  It's
usually a more expensive way to borrow than Stafford.


* College Board Extra Credit Loan

Administered by your college.  Can be expensive, and best
used only in an emergency  e.g. your aid is withdrawn.


* Other Loan Sources

A number of other sources may be worth trying if you get a
problem with your first choice lenders.  Academic
Management Services affiliates with approx. 2000 schools.
AMS pay your tuition fees if you repay them in less than a
year.  College Resource Center also has loans available. 

If your parent served in the military, then a military loan
should be investigated.


College can be the experience of a lifetime.  A child
starts college as a high school kid, and emerges a full
grown adult with high-earning potential…

But he or she needs money to survive and thrive in college.
This article looked at the main sources of student loan
funding, and those sources should be ideal for most
students and their parents.