Invest in learning to attract better opportunities


Invest in learning to attract better opportunities

With the tighter competition of acquiring a job these days, a college education is important. Nowadays, students can find money resources for their college education that parents no longer need to sacrifice their retirement savings. Loan can be an example of financial aid that bridges the gap between a parent saving and tuition bills.

Education loan comes in three categories which unlike scholarship, it is a financial grant that must be repaid along with the interest. The three categories are: student loan, parent loans and private education loans.

Student loans from the federal government are low in rates and does not require collateral or credit checks. They are more lenient than other kinds of loans. They also offer different kind of paying scheme such as deferment options and extended terms of repayment. Aside from the federal government loans there are other agencies or institutions that provide loans. Private lenders offer student loan discounts, depending on the strategy of the company. This is their strategy to encourage student loan borrowers to obtain education loan from them. Shopping for best financial loan is recommended since some lending companies provide lower interest rates than others. The federal law sets the maximum interest that lenders can offer. They have the option to lower the rates of charging and some even offers student loan discounts.

If a student scholarship program or grant does not cover the entire expenses of going to college they have the option to get a loan to supplement the financial aid through his parents. This loan is called parent loans. Like the student loan, parent loans are available thru the federal government or private lenders that are insured by the federal government. The parent loans have its advantages. A borrower can apply up to the maximum cost of the college education, minus the financial aid. They can borrow without collateral. And approval of the loan is not based on the income of the parents. A variety of flexible repayments are available for borrowers.

Although government grants are available for students, the money provided by the federal government might not be enough to cover all the expenses. Or other times, the flexibility of the repayments that parents want may not be available on parent loans. These gaps can be covered by the alternative loan (which is also known as private education loan). Unlike the parent loans, the private education loan requires a credit score. The credit score, yours and that of the co-signor if any, will determine the interest and fee of your borrowed loan. Although repayment option is more flexible than that of the federal loan, private education loan is more expensive. On the brighter side, it is less expensive than the credit card debt. Federal loans offer fixed rate that are far lower than varying interest rate of the private lending companies.

Since the private loans are more costly than parent loans, it is advisable to exhaust first all available federal loans (student and parent loans) before resorting to private lending companies. Federal loans have better options on repayments and forgiveness.

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