Clark Howard shares some awesome & important information regarding student loans, how they work, and how much you should take our per year!
- What are student loans and how do they work? Student loans are loans that can help you pay for schooling. You can take out a small amount to help fill the gap of what you cant afford on your own or you can use student loans to pay your tuition in full. Student loans are to be re-paid in full with interest. For this reason, try not to take out too many student loans.
- Difference between Federal & Private student loans? Federal student loans will come from the government. Private student loans will come from banks, credit unions, or other financial companies. Clark Howard is not a fan of private student loans, saying, “I want you to avoid private student loans at all costs… Back in 2005, the private student loan industry bought off enough politicians to gain the right to do any and all tactics short of causing you bodily harm in their efforts to collect on their money. You have no wiggle room when it comes to repayment options like you do with federal loans. Private student loans typically can’t even be dismissed in bankruptcy.”
- What are the different types of federal loans? Direct Subsidized: 4.53% interest rate, no interest accrued while in school. Direct Unsubsidized: 4.53% interest rate, interest accrued during school. Direct Plus & Direct Plus Parent 7.08% interest rate, interest accrued while in school.
- How do you apply for federal student loans? Fill out a form on FAFSA (Free Application for Federal Student Aid). You’ll need your Social Security number or Alien Registration Number (if you are not a U.S. citizen), your parent’s Social Security number if you’re a dependent student, your driver’s license if you have one, your most recent federal income tax returns, W-2s, and other records of money earned, your bank statements and records of investments, and records of any untaxed income.
For additional information on student loans, click the link below to read the full article!