students loan consultancy

• Federal interest rates are the lowest.


• There are no credit checks- just about everyone qualifies.


• Loans are guaranteed by the U.S. Department of Education (either directly through the Direct Federal Student Loan program or indirectly through the FFELP).


• Students are given a grace period before repayment begins.


• Government loans include many forbearance options.

With these easy terms, its also easy to identify someone who defaults as the worst possible credit risk. No one should ever have to default on a federal student loan.

Okay, so this sound like your best loan choice, right? Well yes, except for one thing...

Federal College Loans Won't Be Enough

...except if you go to a state university or a community college. If you were hoping to finance college using only government loans, you will need to come up with substantial funds to make up the difference between what a private school costs and what the government will lend you.

These are the maximum amounts allowed:

Dependent Students
1st year	$5,500 ($3,500 subsidized)
2nd year	$6,500 ($4,500 subsidized)
3rd, 4th years	$7,500 ($5,500 subsidized)
Grad programs	$20,500 ($8,500 subsidized)

Independent Students
1st year	$9,500 (of which $3,500 may be subsidized)
2nd year	$10,500 (of which $4,500 may be subsidized)
3rd, 4th year	$12,500 (of which $5,500 may be subsidized)
Grad programs	$20,500 (of which $8,500 may be subsidized)

These limits are for federal Stafford loans. Stafford loans are the most widely used federal student loans. (And soon, all Stafford loans will be federal direct student loans.)

Another type of loans are the federal Perkins student loans. There are benefits to getting a Perkins loan, but unless your FAFSA shows dire financial need, you will not be offered one.

Okay so, unless you have one of these...

...you have a large gap between what the federal government is willing to give you and what you're going to need to go to college.

Therefore, its decision time for you and your family. You can:

1. choose to go to a state university or community college
2. take out a private loan

or

you can use one other type of federal student loan...

College Loans For Parents

The Parent Plus Loan can make up the gap. Parents are allowed to borrow up to the difference between the cost of attending college and all other financial aid received. You need to be very, very sure before you commit to this loan. It does not have many of the user-friendly features that other federal loan choices have.

Some things you will want to consider before taking this step are:

• Can you afford to make the payments now, while your child is in school? (Congress just passed a law this year that allows parents to defer payments until after graduation, but who knows if it will continue in the future.)
• Will getting a degree from a more expensive college add real value to your child's future earnings?
• Does your child have a defined major and a chosen career path?
• Is your child fully committed to going the distance towards a four year degree?

If any of these issues are in doubt, rethink parent college loans.

If you take out college loans of any kind, make sure you have a plan for paying off student loans even before your grace period ends.

Federal student loans are a necessary part of your college financial plan, but ultimately they are only one piece of the college funding puzzle.