What are they used for?

Student loans can be used to pay for anything school related. They can pay tuition, lab fees, athletic fees and even meals. If a student is carrying a full semester of courses and cannot work full time due to school, the loans can be used to help with living expenses and other miscellaneous bills. A word of caution: student loans have to be paid back so do not get in over your head. It is very easy to get this ‘easy money’ and forget that it all must be paid back with interest.

Do my parents need to cosign?

Whether or not your parents cosign the loan is based on the type of loan you take out. Federal student loans require their financial information if you are beneath a certain age but those are not credit based. Parent loans are loans given to your parents for your education. The loan is based on their financial information and credit history. Private loans taken out by you may require them cosigning if your credit score is not high enough. Check with the lenders to determine what they need in order to give you a private loan.

How much money should I take out?

This is a hard question to answer. Ideally you should take out only what you need to cover tuition, fees, books and living expenses. There are a couple of questions you need to ask yourself. Are you going to be working? If so…how many hours will you be able to work after you factor in class time and study time. If you are involved in collegiate sports you may not have the time to work. Will you be receiving any aid from anyone else such as spouse or parents? Try to take out just what you will need. Remember that you will have to pay all of this back so let that be your guide in determining how much to take out in loans.

What kind of interest rate will I get?

The interest rate for a Federal loan is determined by the Federal interest rate. Makes sense doesn’t it? This rate will fluctuate but you can pretty much bet it will not go beneath 5%. Private loans on the other hand can be whatever the bank or credit card company sets forth. The interest rate you, or your parents, receive is based on credit scores. The higher the credit score means a lower interest payment.

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This entry was posted on Wednesday, January 2nd, 2008 at 11:31 pm and is filed under Financial Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.