Student Loans - What They Are and Why You May Need Them

With the rising cost to attend college, and the recent cuts in government funding, many students currently in college or about to attend have a big decision to make. They must decide how they will fund their college tuition and books if they are not awarded enough scholarships or grants.

For some, student loans represent a necessary "evil". They are great for some students who have no other alternative and can't attend college without a loan, while they are bad for others who don't want to emerge from college with a big debt.

Perhaps you're one of the students considering student loans and want to educate yourself. This article will go over what student loans are, as well as the pros and cons of them so that you can make the best decision for your situation.

What are Student Loans?

Student loans are loans which college students take out to pay for the cost of attending college. Depending on the student loan you are using, you may have to pay on the loan while in college or shortly afterwards. You also may have to pay for interest that accrues on the loan.

There are several different types of student loans.

Stafford Loans do not have to be paid back until 180 days after you graduate from college. There are also periods of grace for Stafford Loans, should you have problems finding employment post-college. Finally, there are secured Stafford loans in which the government pays all interest on the loan until you graduate. Under unsecured Stafford loans, you are responsible to pay back interest accrued during college. One drawback to Stafford loans is that the max that can be borrowed per year is $2,600, which isn't enough to attend many colleges.

PLUS Loans can be taken out by parents for their children. These loans must be paid back within 60 days of being received. Parents are responsible for repaying the debt and any interest that accrues. The positive side of these loans is that they can cover full tuition, unlike the Stafford loans.

Private Student Loans are typically used to fill in the gaps left by other forms of aid. Parents or students can take out these credit-related loans and are responsible for paying them back. These loans feature high interest rates but fast processing. Why should I consider Student Loans?

If you are a student who cannot get enough grants or scholarships and are worried about attending college, you should consider student loans. Here's a list of the pros:

They're easy to apply for. You just have to fill out one FAFSA form and that's it.

They allow you to attend college when you otherwise might not be able to. College is so useful because it allows you to get a good paying job. Thus, you can consider a student loan an investment in yourself. Why shouldn't I consider Student Loans?

Student loans are often considered a last resort. If you figure out that by working during the summer and part-time during the school year, you can pay for your tuition and other costs, student loans probably aren't a great choice. There is one big con to student loans, and it is listed below.

Once you graduate from college, you'll have a considerable amount of debt to pay off. For instance, if you borrow $3,000 a year, by the time you graduate, you'll be roughly $12,000 in debt. This amount, with interest factored in, could take years to pay off. Further, even if you get a good paying job, combined with other costs, it can be hard to pay the student loans off. The best advice is to explore all your options regarding covering the cost of college. Only consider student loans if there are no other ways for you to pay for college.