Providing good education is a dream that every parent likes to cherish for his child. However, in this era, a good education comes at a fairly high price that an average parent finds it difficult to bear.

At this juncture, US citizens have the opportunity to knock at the doors of the federal government for help. With the objective of providing right education to children and making it affordable, the US federal government has introduced a variety of financial aid programs that can be availed both by students and parents.

There are different ways of raising money for the purpose of education. Some of these include scholarships, work-study programs, family contributions and educational loans. Among these student loans are the most preferred ones. The advantage of a student loan is that the repayment period starts after the student completes his graduation. Apart from that, these loans are provided at lower interest rates and have convenient repayment terms. The interest rate on student loans is not charged till the repayment starts. There are two important types of student loans provided by the US federal government. These include the Perkins Loans and Stafford Loans. In case of a Perkins Loan, the school itself acts as a lender. In case of a Stafford Loan, funds are provided by the banks and other lending agencies that have been approved by the federal government.

The foremost requirement for a federal student loan is to qualify through the FAFSA. Apart from this, there are also federal loans available for parents. One example is the Parent Loan to Undergraduate Students or the PLUS.

One can consult a financial aid officer inside the school campus to have a better understanding about different types of student loans available.

About Author: Pauline Go is an online leading expert in finance industry. She also offers top quality financial tips to investor like:

Refinance Car Loan People with Bad Credit,
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When it comes to finding funding for college the answer may be as close as your back yard. Everyone considers federal government sources of aid to make their college dreams come true but overlook what their state has to offer. State financial aid sources exist to help students who are reaching for a higher level of education. Here is some information to point you in this possibly lucrative direction.

Start with your high school guidance counselor. Any information about grants, scholarships, loans, and other programs offered by the state will be funneled through their office. Make an appointment to talk with them and gather as much information as you can on the options available.

Contact your state educational office. Every state has one. If they have a website, visit and see what they can tell you. States are ready to help students, especially if they plan on attending a state school.

Ask the state educational office for a financial aid handbook. Any scholarships, loans, and grants that are provided by the state can be found in the pages of that book. Study it carefully. Apply for all of the programs that even remotely apply to you, your situation, and your skills.

Scholarship monies are available for attending a state school. A state college or university may not be your first choice, but don’t count them out. One distinct advantage of a state-supported school is the cost. The average cost per year could be half that of a private college or university in another state.

States set aside money for students pursuing certain fields of study at college. The funds encourage students to stay within state to receive their education. This doesn’t mean that you have to attend the same college for all four years. If you truly want to study elsewhere, you can transfer after the first year or two, but understand that these funds more than likely will not follow you to your new school.

Counties issue grants based on their need for graduates to pursue a specific discipline. Teachers and nurses are in high demand. Areas where there is a significant shortage offer students the chance to go to college for little or nothing in return for a certain number of years of service in the needy area.

States provide grant money for minority students. These grants give money to qualified students based on race, religion, and sex. If you fall into one of these categories, apply for the grant and get the money you need for college.

The best thing about grant money is that it does not have to be paid back. It is important to check with the grant foundation on the renewal particulars of the grant. You don’t want to miss out on money in subsequent years because of a failure to renew the grant.

Local businesses and civic organizations offer scholarships for students planning on attending college. For some of these scholarships, students are chosen based on their academic record in high school. Other ones require an application to be filled out for consideration.

Banks in your state may offer college loans for parents and/or students. The loans supplement any costs that are not covered from other financial aid sources. Loans should always be a last resort when considering all forms of aid, but they are available if you need them.

Another avenue of inquiry is the financial aid office of a state college. After deciding to attend a state school visit or call their financial aid office to learn about any state grants or scholarships that are available on their campus. The state government or corporations may partner with state-funded schools or private colleges to offer money to students in need.

With all of the state sources that you find, be mindful of application deadlines. Many of the deadlines will be around the same time so staying organized is a must to get all of the information in on time. Late applications will not be considered.

State financial aid sources do exist. Check with state educational offices and your high school guidance counselor for more information.

Find out where to locate money for college in the form of scholarships, grants, fellowships, and student loans. Mark B. Allen knows where to get money for college he is an expert writing a regular column for Financial Aid Finder. The topics Allen covers include state government aid programs, 529 College Savings Plans and fellowships, and federal student loans. Financial Aid Finder is an expert source of information for high school and college students who need help filling out forms, advice on using their financial aid counselors, and assistance locating money for tuition and books.

The University of Wyoming has introduced the Trustees Pride Scholarship Program which offers eligible students full scholarships that cover tuition $ fees and room & board.

The Universities decision to offer the full scholarship comes after the state decided to invest 400 million dollars in an endowment for the new Hathway Scholarship Program. With the additional funding from the state, UW can now use its funds to offer big-ticket scholarships and keep the top high school students from leaving Wyoming.

Since last fall, Wyoming has been offering up to $3200 to qualifying high school students who attend UW or the states community colleges.

Students with a high school GPA of 3.7 or above and ACT scores of 29 or higher qualify for the Trustees Pride Scholarship Program. The scholarship, amounting to almost $14,600 replaces the Trustee Superior Scholarship and the Presidents Honor Scholarships, which were available to fewer students.

One of the main reasons why Wyoming is getting aggressive with its education funding is the depleting pool of its high school graduates. According to the department of education, the state lost almost 900 graduates between the years 2000 - 2005. This was mainly due to out of state colleges offering bigger scholarships.

Currently, only about 13% of Wyoming’s high school graduates attend UW and about one-third attend community college. If the university wants to sustain its target population of around 13,000 students, it will have to recruit a larger percentage of Wyoming graduates each year. By revamping its scholarship structure, UW hopes to raise its profile and reduce the leakage of bright students from the state. The University is also luring non-resident students with good grades by offering them higher scholarships.

Rachna Mehra is a freelance writer from NYC, New York. For more information on scholarships and financial aid, visit http://www.Freescholarshipguide.com

Students and families are often confused with the variety of options available when it comes to financing a college education. There are a myriad of options, from college scholarships and grants to federal and private student loans.

As part of the Higher Education Act of 1965, President Lyndon Johnson created this law which was intended “to strengthen the education resources of our college and universities and to provide financial assistance for students in postsecondary and higher education.” This increased all sources of federal funding provided to universities and added in grants and other forms of financial aid.

The Federal Stafford Loan is available to both undergraduate and graduate students enrolled at least half-time at a college or university accepting federal aid. This is a need-based program in which undergraduates may borrow up to $5,500 per year in subsidized funds based on academic level and graduate level students may borrow up to $18,500 per year (up to $8,500 in subsidized funds and the remainder in unsubsidized funds). The funds are sent directly to the school and are applied to the student’s account. To ease the financial burden, payments are not required until six months after the student graduates. When looking to apply for a Stafford Loan, students should see what types of borrower benefits each lender is offering. As these student loans are all fixed at the same interest rate set by the U.S. Government, lenders are offering incentives to borrow by way of discounts, such as waived fees, rate reductions for early payment and cash back.

While a Federal Stafford Loan is certainly a necessary start, it doesn’t always cover the entire cost of education. A Parent PLUS Loan is a common way that parents contribute to their child’s education. This credit-based loan allows parents to borrow the total cost of undergraduate education including tuition, room and board, supplies, college fees and more, minus any other aid received. Once the loan has been put into the student’s account at the school, repayment begins shortly thereafter, at which time the student loan consolidation process can be performed. At a fixed interest rate, the Parent PLUS Loan is an easy and cost effective solution to help bridge the gap between Stafford Loan funding and the cost of education.

For many years, graduate students were only given Stafford Loans as a federal loan option for funding their often costly education. The difference was made up through home equity, savings, salaries and private loans. However, the Graduate PLUS Loan is a new product that became available to graduate students in 2006. Graduate students with good credit can apply on their own signature for a loan up to the cost of education, minus any other aid received. The Graduate PLUS Loan can be applied to tuition, room and board, education supplies, lab and travel expenses. The interest rate is fixed and payments are not required while enrolled in school. Upon graduation, borrower benefits kick in to help students save money during repayment. Or a student may save even more by consolidating this loan using the federal loan consolidation program. The Graduate PLUS Loan truly provides graduate students with a great option to making their graduate education dreams a reality.

The Perkins Loan is another federal loan available to both undergraduate and graduate students offered on the basis of financial need, other aid received and availability of funds at each school. The federal government lends schools funds for distribution to its neediest students. The school, therefore, is the lender, and undergraduates may be awarded up to $4,000/year and graduates may be awarded up to $6,000/year. These loans need to be repaid directly to the school and have a fixed 5% interest rate since the program was started. Students can take advantage of a nine-month grace period and a ten-year repayment term. However, if consolidated with any existing federal student loan, including Stafford or Graduate PLUS Loans, this can extend the repayment term. Consolidation has been mentioned a few times and it’s really in the best interest of students to take advantage of this upon graduation. Each federal loan, on its own, has a 10 year repayment term, regardless of total loan debt. Consolidation fixed the interest rate and extends the repayment term, allowing more time to repay an often hefty federal loan debt.

Named for Senator Claiborne Pell, the Pell Grant was established to provide funds that don’t need to be repaid directly to the neediest students. This is because it is a grant and not a federal student loan. However, like the Stafford and Perkins Loan, eligibility is based on need, as determined by the cost of attendance and expected family contribution. Since 2003, the maximum Pell Grant award has been $4,050 per academic year. However, due to the rising cost of education, many question why the Pell Grant award has not also increased. The Pell Grant covers, on average, one-third of the yearly cost of education at a public four-year institution. However, twenty years ago, it covered close to 60%. On February 15, 2007, in an attempt to slowly combat this issue, President Bush signed legislation into law that would increase the Pell Grant to $4,310 for the 2007-08 academic year. The following year, the grant will increase to $4,600 and up to $5,400 by the year 2012. These advances are certainly helping students and families fund the cost of education, especially as tuition costs continue to rise

Private student loans have gained popularity over recent years as federal funding hasn’t quite met the entire cost of education. There are many other costs associated with education, besides just tuition. Commuting students need to cover transportation costs somehow. City campuses don’t always guarantee housing, which forces students to find an off-campus apartment, often with high rent costs. There are costly textbooks to purchase, lab supplies and flights home that aren’t always covered by traditional financial aid. Private loans originate to students by a bank or other financial institution, unlike federal loans. Private student loans also offer similar benefits to students as a federal loan, such as deferred payment until graduation, different loan repayment terms, and borrower benefits. The interest rates on private loans vary from company to company and are, usually, on a basis of credit. Co-signers are a great way for a student who may have limited or no credit at all to get this loan. Because of the varying private loans available, most parents and families “shop around” until they find their ideal solution.

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

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Federal student loan consolidation is a re-financing program that allows you to
combine all of your existing federal student loans into one new single loan.

There are no application fees, credit checks, or cosigners required for a
student loan consolidation. Benefits of consolidation include:

1. Lower monthly payments.
Student loan consolidation provides a longer repayment term, which in turn
lowers your monthly payment. This will free-up more money to use for other
expenses such as rent or mortgage payments, food and car expenses, utility
expenses, and credit card payments. Depending on your total balance, you
could reduce your monthly payments up to 53%. Because there are no penalties
for early or extra repayment, you can make larger payments when it becomes
affordable to.

2. Lock in a low fixed interest rate.
Currently, unconsolidated federal student
loans have a variable interest rate which changes each year on July 1st based
on the Treasury bill. By consolidating your student loans, you can lock in a fixed
interest rate for the life of your loan.

3. Customize a payment plan.
By consolidating your student loans, you’ll have the opportunity to choose a payment plan that best fits your current income level. Plans such as the Graduated Repayment Plan start out for the first
several years as a lower interest only payment, and then increase to a level repayment plan. This plan is helpful for those who need payment relief right out of school, while they look for a job and get established.

4. One payment per month.
By consolidating, you eliminate the need to make multiple monthly payments to each of your federal lenders. With all of your loans combined, you will only need to write one check each month. Plus, if you opt for automatic checking account withdrawal, not only will payment be simple, you’ll also save .25% on your interest rate.

5. Maintain your deferment and interest subsidy benefits.
Because federal student loan consolidation is simply a new federal loan, you will
not lose your loan deferment and forbearance benefits. Additionally, you will
maintain your interest subsidy benefits on any subsidized FFELP or subsidized Direct loans that you consolidate.

6. Help your credit.
Consolidation takes all of your existing federal student loans, pays them off in full, and combines them into one new loan. Instead of having multiple open loans with limited payment history, you will have just one loan. Your older student loans will be listed as paid in full. In a nutshell, consolidation helps eliminate
open lines of credit.

7. Borrower benefits.
Consolidation offers cash saving borrower benefits for timely, automatic payments. You can reduce your interest rate by an additional .25% just by having your payments deducted from your checking account, and an additional 1.00% reduction for certain loan balance sizes, after making 36 on-time payments.

When should you consolidate?
You can consolidate during your grace period or during loan repayment. Your grace period is a six month no-payment window after you graduate or drop below half-time enrollment, before your loans go into repayment. Consolidating during your grace period provides the added benefit of a .6% discount once your consolidation is complete. Because your interest rate is locked, the .6% discount remains for the entire term of repayment. Additionally, apply before July 1st, 2007 - interest rates are expected to increase, so take advantage of this year’s lower rates.

For more frequently asked questions, visit:
http://www.studentloanconsolidator.com/consolidation/faq.shtml

Federal Loans Eligible for Student Loan Consolidation
Here is a list of federal loans that are eligible for student loan consolidation:

1. Stafford Loans

2. Perkins Loans

3. Federal Direct Loans

4. Federal Parent Loans for Undergraduate Students (PLUS)

5. Federal Grad PLUS Loans

6. Federal Supplemental Loans for Students (SLS)

7. Federally Insured Student Loans (FISL)

8. National Direct Student Loans (NDSL)

9. Loans for Disadvantaged Students (LDS)

10. Auxiliary Loan to Assist Students (ALAS)

11. Health Education Assistance Loan (HEAL)

To apply online, visit www.studentloanconsolidator.com/apply

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

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For many career paths, attending graduate school is a necessary next step. Doctors, lawyers, psychologists, librarians and teachers all require an advanced degree. Additionally, many choose to re-enter the world of academia after some years in the working world in order to further their level of expertise. However, the demands of graduate school are high, entailing a great deal of time, discipline, and money. The number of students enrolled in a graduate level program continues to rise annually - and many of those students become overwhelmed with how to finance these programs.

After filling out the FAFSA and receiving the award letter from the school, graduate students should take out the maximum amount of Stafford Loan funds they have been awarded. Stafford Loans are the most commonly-known form of federal financial aid, providing graduate students up to $18,500 per academic year, based on need. There is no credit check, no collateral required and payments are not due until after graduation. However, $18,500 usually does not cover all the expenses associated with the entire cost of education.

The long-awaited Graduate PLUS Loan became available on July 1, 2006 to all graduate students enrolled at least half-time in a program that participates in the federal loan program. Before the Graduate PLUS Loan, there were very few financial aid options tailored to graduate students. After exhausting the maximum Stafford subsidized funds lent ($18,500), graduate students had to turn to high interest rate credit cards, home equity, or savings to get over that hurdle. The Graduate PLUS Loan gives graduate students the option that they need - a low, fixed interest rate loan to fund up to the cost of education and no required payments while enrolled in school.

Sometimes, however, last minute or unplanned expenses come up - laptops break or lab supplies need to be purchased. Private student loans allow graduate students to also borrow up to the cost of education. Unlike a federal loan where the funds are sent directly to the school, many private graduate student loans cut the check directly to the student. Therefore, the student can use the funds at their discretion for any educational-related expense. While interest rates are typically based on credit, many find that the benefits of a private student loan outweigh the costs - repayment waits until graduation, the FAFSA isn’t required, and students can fund up to the cost of education.

Every graduate student has a different need for student loans and there are many options available, so do your research before applying. Make a budget and subtract expenses from income (loans, salary, etc.) There are solutions to funding a graduate education but it starts with you.

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

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As you consider how to pay for college, the very first place to start is with college grants and scholarships. Unlike student loans, grants and scholarships generally do not have to be repaid. There are billions of dollars of grants and scholarships available from hundreds of thousands of organizations the key is doing your research and starting early.

Grants are based on a combination of financial need, and in some cases, academic performance. For example, the Federal Pell Grant offers up to $4,050 (for the 2006-07 school year) depending on your financial need and the cost of attendance at your school. Applying for the Pell Grant and other federal grants is done through the Free Application for Federal Student Aid, or the FAFSA, which is a free financial aid form. Your FAFSA results, called the Student Aid Report (SAR), will inform you if you’re eligible for a Pell Grant, and for how much. Other grants controlled by the FAFSA include the Supplementary Educational Opportunity Grant, the National SMART Grant, and the Academic Competitiveness Grant.

College scholarships are another source of funds for education that don’t have to be repaid. They are typically offered to students who meet specific requirements, and are typically funded by private benefactors. Though many scholarships are awarded on the basis of academic merit or financial need, not all are. Some scholarships are random drawings, while others have requirements designed to focus on improving access to specific demographics, like minorities or certain fields of study.

There are millions of need- and merit-based scholarships worth over $10 billion. There are many websites listing scholarships - StudentScholarshipSearch.com currently has over $7 billion scholarships available for visitors. In addition to the Internet, meet with your high school guidance counselor who may have a list of local scholarship opportunities.

It is important to research these student scholarships early since many require an application and/or interview. Although you will not apply for college until you are a senior in high school, start to research scholarships in your sophomore or junior year. This will allow you to identify potential scholarships and give you time to meet all the qualification criteria. Be as specific as possible - the more targeted your search, the less competition you will have from other applicants and the more likely you are to stand-out to the organization providing the scholarship. For more details about how to search effectively, read the free Scholarship Search Secrets e-Book available at StudentScholarshipSearch.com.

Apply for as many college scholarships as possible - there is no limit and every dollar of scholarship funds you accrue will limit your need of student loans. Many scholarships require you to submit an application and/or participate in an interview, so be sure you qualify for the scholarship before applying. Try to set a specific time each week to apply for at least two scholarships - every Sunday afternoon, for example. In a year’s time, you will have applied for over 100 scholarships.

Another key fact often overlooked is that in the end, what matters most is how much scholarship money you have been awarded, whether it comes from a single scholarship for $1,000, or 10 scholarships for $100 each. Apply for large and small scholarships alike; the larger the scholarship, the more competition there likely is for it, so you may find in your search that applying for many smaller scholarships will improve your chances of being awarded money.

One last word of caution - be sure to avoid scholarship scams. Typical signs of scholarship scams include asking for very detailed personal information, such as a Social Security number or date of birth. Any scholarship award that asks you to pay money of any dollar amount is likely not legitimate. Awards which require you to give any kind of financial information such as bank account numbers or credit card numbers are almost certainly scams. Receiving a notice that you’re a finalist in a scholarship you never applied for is almost certainly a scam. Generally speaking, scholarship search services, while not necessarily scams, don’t offer value above and beyond what a search engine like Google can provide, so it’s usually not worth paying for them. Above all else, trust your gut instincts - if something feels like a scam, it probably is.

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

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Award Letter: A notice from a financial aid office to a student that specifies the financial aid programs and dollar amounts that the student has been granted.

Consolidation: This process takes your existing student loans and combines them into one lower monthly payment. Performing student loan consolidation can reduce your payments by up to 60%. It saves money and provides additional options for loan repayment.

Cost of Attendance (COA): The total cost that the financial aid office estimates a student will incur during attendance at that college or university.

Default: Failure to repay a loan according to the terms agreed to when you signed a master promissory note. Default may also result from failure to submit requests for loan deferment or cancellation on time. The consequences of default are severe.

Deferment: A temporary period during which a borrower is not required to make payments. Deferments are more common in federal student loan programs rather than alternative loans. For subsidized Stafford Loan borrowers (and Perkins Loan borrowers), many deferments are subsidized, meaning the interest that accrues on the loan during the deferment is paid by the federal government. Some deferments are unsubsidized, meaning the interest that accrues must be paid by the borrower.

Department of Education: The federal agency that establishes financial aid programs and processes for financial aid applications.

Entrance Counseling: An educational session that first time federal student loan borrowers must fulfill before the loan’s proceeds can be disbursed. The entrance counseling sessions provide these first time borrowers basic information about student loans and the terms and conditions the loan programs.

Exit Counseling: An educational session that federal loan borrowers must fulfill around the time of graduation. The exit counseling session provides the borrower detailed information about the loans he/she borrowed, the company that will collect the payment and the repayment alternatives that are available.

Expected Family Contribution (EFC): The amount that a student and family can be expected to contribute towards educational expenses over the academic year. The EFC is calculated when the student submits a FAFSA.

Federal Work Study: Federally funded program that allows colleges and universities to create campus based employment programs for financial aid recipients.

Forgiveness: Under certain circumstances, the federal government will cancel all or a part of student loans.

Free Application for Federal Student Aid (FAFSA): The official application form for all federal financial aid programs. The FAFSA form is available online at FAFSAOnline.com.

Graduate PLUS Loan: A federally guaranteed loan program allowing graduate students to borrow up the cost of education minus aid. Payments are deferred until after graduation at which point repayment is at a fixed interest rate. Visit www.GradLoans.com/PLUS for more information.

Grants: A type of financial aid award that does not have to be repaid. Grants are often made based on an applicant’s financial need or EFC.

Guarantee Fee: A type of fee a borrower pays to a lender. Guarantee fees are collected as a financial reserve to protect the student loan program in cases of student default. Federal Stafford, Parent PLUS, Graduate PLUS, and Federal Direct Student Loans have a maximum guarantee fee of 1% of the loan’s initial principal.
Interest Rate: Rates are fixed, adjusted annually and set by the Department of Education. The date the federal loan interest rates change is July 1st and covers the next 12 month loan period.

Master Promissory Note (MPN): The binding legal document you sign when you get a student loan. It lists the conditions under which you are borrowing and the terms under which you agree to pay back the loan. It will include information about your interest rate and about loan deferment and cancellation provisions. It’s very important to read and save this document because you will need to refer to it later when you begin repayment.

Origination Fee: A fee the borrower pays to the lender for originating a student loan. Origination fees are most often associated with Federal Stafford, Parent PLUS, Graduate PLUS and Federal Direct Student Loans. The maximum origination fee for these federal loans is 3% of the loan’s initial principal.

Parent PLUS Loan: A credit based loan in which parents of undergraduate students can take out a federally guaranteed loan to cover up to the cost of education minus any other aid received. The interest rate is fixed and repayment begins after the second disbursement. Visit www.ParentPLUSLoan.com for more information.

Perkins Loan: A need based student loan offered by the Department of Education through each college or university with repayment to be paid directly to the college upon graduation. With the Perkins Loan, students are given a nine month grace period and no payments are required while enrolled in school.

Private Student Loan (or Alternative Student Loan): These loans that are not guaranteed by a government agency and are made to students by banks or finance companies. Private student loans generally offer higher loan limits than federal loans. But unlike to-the-parent government loans, they generally offer a grace period with no payments due until after graduation. This grace period ranges as high as 12 months after graduation, though most private lenders offer six months. Visit www.acteducationloans.com for more information.

Scholarships: A financial aid award that does not have to be repaid. College scholarships are generally made based on an applicant meeting certain eligibility criteria.

Stafford Loan: A federally guaranteed need-based loan that allows students to borrow specified funds from lenders to help cover tuition expenses. Stafford Loans allow the student to defer payments while he/she is enrolled school and repayment is at a fixed interest rate. Visit www.StaffordLoan.com for more information.

Subsidized Loan: Interest that accrues on Subsidized Stafford Loans while the student is in school (at least half-time) is paid by the federal government on the student’s behalf.

Unsubsidized Loan: Interest that accrues on unsubsidized loans must be paid by the borrower, even while he/she is in school. The borrower may make payments or allow the interest to accrue throughout enrollment and have the interest “capitalized” (added to the loan’s principal balance). While capitalization eliminates having to make payments while in school it then increases the total cost of a loan.

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

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Are you beginning the process of figuring out how you’re going to pay for college? Financial aid is great - it’ll help you achieve your education dreams, but it’s a complex process with a growing variety of student loan options from which to choose. Assuming you’ve explored all opportunities for scholarships and grants, your next option is to research student loans. These come in two general categories: federal student loans and private student loans.

The first place any prospective student should start is with federal student loans. Federal student loans are backed by the U.S. government and are available directly through your school or through banks and student loan lenders via the Federal Family Education Loan Program (FFELP). These loans typically have lower interest rates, multiple repayment options, longer repayment periods, and much easier credit requirements than private loans. In order to receive a federal student loan, you must complete and submit the FAFSA, the Free Application for Federal Student Aid. For assistance with this form, visit FAFSAonline.com.

Federal student loans come in a variety of forms, from need-based aid to loans targeted to parents.

Perkins Loan
The Perkins Loan offers a very low fixed rate of 5% to undergraduate and graduate students who demonstrate financial need. Depending on your level of need, undergraduates can borrow up to $4,000 and graduate students up to $6,000. Unlike other federal loans, the funds are dispersed from the school and the student does not have to be enrolled at least half-time to be eligible.

Stafford Loan
The Stafford Loan is the most common federal student loan as it is not necessary to demonstrate financial need - anyone can apply. These loans carry a fixed interest rate and come in two forms: subsidized and unsubsidized. The interest on subsidized Stafford Loans is paid by the government while the student is in school; the student pays the interest on unsubsidized Stafford Loans but they can defer making any payments until graduation. All Stafford Loans require the student to be enrolled at least half-time. Depending on year, students can borrow between $2,625 (freshmen) and $5,500 (senior) a year.

PLUS Loan
The Parent Loan for Undergraduate Students (PLUS) is targeted to parents of dependent undergraduate students who are enrolled at least half-time. Although there is not a full-scale credit check for these loans, the applicant must not have any adverse credit experiences on their record (e.g., bankruptcy, default). Parents can borrow up to the student’s cost of attendance less any other aid the student has received. These loans carry a fixed interest rate that is higher than the rate for Stafford Loans, and repayment starts while the student is in school.

Private (or Alternative) Loans
As mentioned above, you should exhaust your options for federal loans before turning to private student loans. But federal loans often do not fully cover the cost of tuition. The market for private loans has been growing dramatically in recent years to help fill the gap between rapidly rising tuition costs and funding from federal student loans. There are a few pros and cons to consider when looking for private loans.

Pros:

1. Students can borrow up to 100% of the cost of education

2. Many offer borrower benefits that can reduce the interest rate

3. Lower rates may be available if your school certifies enrollment and the check is sent directly to the school

4. Funds may be used for tuition, room and board, books, or a computer

5. You are not required to complete the FAFSA

Cons:

1. These loans are subject to a credit check, which will determine approval as well as your interest rate (using a co-signer significantly increases your chances of approval)

2. The interest rate is variable and may increase over the life of the loan

3. Private student loans may not include a deferment option

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

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The Free Application for Federal Student Aid, or the FAFSA, is one of the most misunderstood and important forms you’ll ever file when it comes to paying for college. For a step-by-step guide, you can visit the FAFSAOnline Website.

Here are the top 5 tips to keep in mind when completing this important form:

#5: Do your IRS 1040 first.
Even if you don’t plan on filing your IRS 1040 on paper, I strongly recommend you complete a 1040 BEFORE you start your FAFSA. Approximately 80% of the FAFSA is based on IRS tax data, and by completing the 1040 first, you’ll save yourself a LOT of time. Even if you don’t have your W-2 and 1099 forms from your employers, you can still estimate using your last pay stub(s) from 2006.

#4: Mind the clock.
There is a limited pool of financial aid in the form of college scholarships and grants made available each year. The sooner you file your FAFSA after January 1, 2007, the more likely you are to receive money from this pool (which includes the Pell Grant, AC Grant, SMART Grant, FSEO Grant, and work study) if you’re eligible. The money in the pool is distributed on a first-come, first-served basis, so if you wait too long to file your FAFSA, you may not receive anything from the pool, even if you’re eligible.

#3: It’s better to be right than fast.
Even though speed counts with the FAFSA, correctness counts even more. Be sure you’re filing the FAFSA correctly, paying careful attention to the instructions and the included worksheets. For example, regarding dependency, a lot of people have situations at home which aren’t necessarily reflected on the FAFSA form. Be absolutely sure that you fill out the questions on the FAFSA according to the guidelines provided with the form about who is or is not a dependent student. And be sure to avoid typos: Putting down 123 Sesame Drive for a home address when you really live at 123 Sesame Street will instantly kill your FAFSA and any chance you have for federal student loans.

#2: Zero is the biggest thing.
In any field on the FAFSA that asks for a monetary amount, never, EVER leave it blank. If you’re unsure if it applies to you, fill it in with a ZERO. Leaving a field blank does not automatically make it zero, which can affect how much aid you receive.

#1: File anyway.
The number one most important tip for the FAFSA is to file one regardless of whether you think you’ll qualify for federal financial aid or not. Filing a FAFSA is completely free of charge, and if you file online, you won’t even pay for postage. Many schools and states use the results from the FAFSA for institutional and state-based financial aid, as well as some private scholarships and grants, so always complete the FAFSA every year, no matter your financial situation.

Christopher S. Penn is the producer and creator of the Financial Aid Podcast, a daily free Internet radio show about making college affordable, as well as Chief Technology Officer of the Student Loan Network. This organization offers federal student loans and student loan consolidation for college students, both undergraduate and graduate. His work has been featured in several books, newspapers, and conferences.

http://creativecommons.org/licenses/by-nd/3.0/us/