This year, predictions say that more than 3.5 million students are going to graduate from their high schools and most are expected to go to college. This is definitely a moment of pride for many students but the parents remain stressed thinking of their finances, how they’re going to pay off the school expenses during the fall. Before you push your children towards taking out student loans or you take a drastic step of taking out a loan in your name, you should ensure knowing and understanding the pros and cons of taking out student loans.
There are indeed many small unknown and ignored factors on student loans which both parents and students need to know. So what are those small details on student loans? Let’s check them out.
- You still have enough time to complete FAFSA
You must be aware of the fact that your students have to complete the FAFSA or Free Application for Federal Student Aid every year in order to be eligible for federal grants, loans and other study programs. In case your child still hasn’t completed filling out this form, there is still time to do it. Although the deadline given by the government is 30th June, 2018, individual schools and states sometimes give you an earlier date. Since schools may have restrained funds, the earlier your child applies the better for him to qualify.
- Seek help of government loans first
Once your child completes the FAFSA, you can easily find out the types of federal aid which your child is eligible for. If you think that your children need to obtain loans to pay for school costs, boost them to start with federal student loans instead of private loans. Loan offered by the federal government carry lower rates, generous terms of repayment and they don’t need enough credit history or co-signer. They even lots of benefits and perks like deferment options, income-driven repayment plans, forbearance options and many more for instances when your child finds it tough to make payments on time.
- Know the way in which Parent PLUS loans work
Do you want to help your child pay for school? If answered yes and if you still don’t have enough funds saved to pay for it outright, you can be eligible for a parent Direct PLUS loan which is a federal loan which caters to the needs of parents of students who are dependent. In order to be eligible, you have to be the adoptive or biological parent and your child should be enrolled for half-time in a school. However, unlike other federal loans, parent PLUS loans need a credit check.
Therefore, if you’re wondering about the ways in which you can take out student loans, you should know the above mentioned facts on student loans so that you don’t take a wrong decision on loans. Share the information with your children so that they too know what to do with their educational loans.
