Private Student Loans VS Federal Student Loans

Federal student loans

If you need a loan to attend college, you basically have two main options - a private student loan or a federal student loan. Each of these has their pros and cons; although it is generally easier to apply for and qualify for a federal loan as many private lenders will require an applicant to have good credit.

Federal student loans are the largest source of college funding in the United States and have several advantages. Not only do they usually have lower interest rates than others, but the interest may be paid by the government while you are at school. The fees and the interest rates are standard and don’t vary by lender - eliminating time spent in shopping around and comparing options.

And they also tend to have flexible options for repayment, including consolidation and the option of not repaying until you are employed. Federal student loans also usually have the option of a longer repayment term, making them ideal for those graduates who don’t immediately find employment, or those who don’t earn enough money to pay it back quickly.

The most common federal loans are probably the Stafford and the Perkins, both of which are based on the needs of the applicant. If you qualify for it, the Perkins loan is probably the most attractive option, designed for those with exceptional need. It has a low interest rate of 5% and allows an undergraduate student to borrow up to $4,000 per year; $6,000 is available for a graduate student. It also has a generous repayment period of up to 10 years.

The Stafford loan is flexible in that it can be subsidized or unsubsidized; and the interest is paid by the government during school, during the grace period and during deferment. Staffords do have a small origination fee, although this will be eliminated by July, 2010. The interest rate on the Stafford-loan is the same, regardless of the lender you choose, although some lenders offer a small discount for electronic payments and on time payments.

Private student loans don’t require the applicant to complete any of the often lengthy and complicated federal financial aid forms. Repayment options on these can also be flexible, sometimes giving you the option of repaying immediately after graduating. Many people who aren’t able to qualify for enough federal borrowing amounts end up using a private student loan; and for those with credit that isn’t good, they allow for a cosigner on the loan.

However, private student loan are nearly always more expensive than federals, not only is the interest rate higher, it is usually variable as well. Private-loans are almost always based on an applicant’s credit score, rather than their educational needs - in general, if you have a credit score of less than 650, its unlikely that you will be approved for a private student loan.

Whichever student borrowing option you choose, keep in mind that you have to pay it back at some point! Never borrow more than you really need, or will realistically be able to easily repay.

By Emeka Ezidiegwu

Why You Must Apply For As Many University Scholarships As You Can

university scholarships

Most of the college and university scholarships available today are not awarded based on financial need as they were in the past. The scholarships are also not only awarded for the academic genius, the star athletics superstar, or the captain of the chess club, but they are awarded based on a wide variety of different factors such as the major you have declared (and you can always change your mind!), your heritage, your last name, and many other things. There are even scholarships for left handed students!

The major difference in scholarships opposed to student loans is the money does not have to be repaid at graduation. Student loans are expected to be paid back after graduating. Who wants to start their life in the real world after graduation having a huge financial burden of student loans that now need to be repaid?

Applying for university scholarships can be fun. As an example, the Duck Brand Duct Tape Company holds a contest for students age 14 years and older who are attending a high school prom. Entrance is open to couples only and both parties must be decked out wearing accessories or costumes made out of duct tape. A color photo of the couple together in duct tape attire must be submitted. First place prize is a $3000 scholarship for each person of the winning couple. Another $3000 cash prize goes to the host school. Additional prizes include $2000 for second place and $1000 for third.

The American Association of Candy Technologists sponsors annual $5000 university scholarships. It is open to college juniors, sophomores and freshmen to use for the following academic year. Students who have an interest in confectionery technology (making candy) are encouraged to apply. To qualify, candidates should be attending a four-year university in North America, be majoring in biological science, food science, or chemical science, and have a GPA of at least 3.0.

Have you come up with a great idea or invention? The National Inventors Hall of Fame gives university scholarships to undergraduate and graduate students for inventing new ideas, processes, and technological innovations. The invention must be patentable, and not have been made available to the public or patented more than one year prior to the date of submission of the competition. Submissions are judged on their potential value to society, originality, and inventiveness. Up to four students may work together as a team, but only one prize is awarded to each entry. One lucky winner walks away with the grand prize of $25,000! There is also competition prizes of $15,000, and $10,000 awarded.

The David Letterman Scholarship was established in 1985 to provide university scholarships for telecommunications students. The awards are intended for creative students who make average grades. Winners are judged primarily on creativity. Projects used to enter can be crafted using film, graphics, written, audio, or video. The winner receives a $10,000 scholarship, $5,000 goes to second place, and $3,333 is awarded to the third runner up.

Do not let a lack of funds stand in your way of receiving a quality college education that will gain you a rewarding future. Many university scholarships go unclaimed each year because no students apply for them. Do not let a lack of applying for possible scholarships hold you back from being awarded one (or more) of them.

By Jon Arnold