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Loans

There are many issues to consider when taking out loans to pay for college.

The Stafford Loan is one of the Department of Education's largest financial aid programs. Students can participate in the Stafford Loan program through either the William D. Ford Federal Direct Loan (Direct Loan) or the Federal Family Education Loan Program. The application process for both programs begins with filling out the Free Application for Federal Student Aid (FAFSA).

The major difference between the two loan programs is the lender. Under the Stafford Loan program, students borrow funds from commercial lenders. Under the Direct Loan program the federal government is the lender.

The financial aid process is not an easy task and deciding how much to borrow can be even more difficult. FinAid.org does offer an online calculator that assists students with estimating borrowing needs. However, before borrowing any amount, students need to examine how much those payments will be after graduation. An excellent resource for this is the College Board's Student Loan Calculator, which attempts to take into account a student's starting salary after graduation and that student's future earning potential.

Be sure to read and understand all loan agreements before assuming the responsibility of repaying a loan.
 

 

 

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