Now there is a lot of controversy and confusion surrounding students loans for college. I am Janet Bodnar, Deputy Editor of Kiplinger's Personal Finance and I am going to tell you, how to get the best deals in student loans.
First thing you need to do is, fill up the FAFSA, now that's the acronym for the Free Application for Federal Student Aid and this is what you need to fill out, the form you need to fill out, in order to get access to Federal Student Aid. Federal Aid is the best aid you can get, in terms of the lowest interest rates, you can fill out the FAFSA online, it's an easy form to do, don't be afraid of it.
Start with Perkins Loans, now those are the lowest cost Federal loans. They come with a fixed interest rate of 5%. Now the down side is, they are only for the needee student. So you may not qualify financially, but if you do, grab those Perkins Loans.
Next is to take advantage of Federal Stafford Loans, now these are the loans that most students are going to take, they come with a very good fixed interest rate of 6.8%, if you qualify on the basis of financial need, the government will even pay the interest, while your student is in college and when it comes time to repay the loans, the loans offer a lot of flexibility.
Look for discounts and other perks. Now on Stafford Loans most of the terms and conditions are going to be the same from one lender to the next, but there are some things that you should look for, for example, some lenders might give you the loan up-front with no fees and that's a good thing to do. Any kind of profit you can get this kind of an immediate reward as opposed to something which is foreign to the future, it's something that worth looking for.
The last thing is that parents should take advantage of Federal PLUS Loans. Now PLUS stands for Parent Loans for Undergraduate Students and what parents can do is, borrow as much money as they need to fill in the gaps, after the student has a Financial Aid package, has taken out Stafford Loans. You as the parent can borrow again at a very good fixed interest rate of 8.5%. Parents don't take full enough advantage of this program and you should, if you need to.
I am Janet Bodnar, and these are the basics.
Transcription by:
Scribe4you Transcription Services