For most students and their families, student loans are a necessary part of higher education. The challenge for parents and students is to become well-informed about loans so that there are not surprises when it is time to pay then back after graduation.

Interest rates for federal student loans are fixed, meaning that the amount will not change while you have the loan. This is a good thing for students looking to get federal student loans right now. Interest rates are also low, meaning that students can get some good deals when it comes to the interest that will be added to the amount of their student loan.

There are two types of loans available to students: subsidized loans, which are based on financial need, and unsubsidized loans, which are not based on need. The option that is best for you will depend on your family’s income level and the options that you are presented with upon completion of the FAFSA forms.

One of the best student loan options for students are Perkins Loans. These loans are very competitive and awarded to students demonstrating “exceptional financial need.” Students can borrow up to $27,500 to finance their undergraduate education. Perkins Loans have a five percent fixed interest rate.

Perkins Loans are also unique in that they are eligible for federal loan cancellation. This option means that students can opt to work in nursing, law enforcement, social services, or teaching in a low-income area after college to have the loan waived after a certain number of years. It can also be waived if they volunteer with the Peace Corps or a similar organization.

Parents and students are often concerned about how much money they can borrow. One guideline states that students should try to keep loans under control by estimating their monthly income after graduation. Monthly loan payments should make up no more than ten percent of that expected income. There are many websites that allow you to calculate salary estimates for different careers in different cities.

Many student loans offer grace periods of between six months and one year after graduation. Checking on the grace period when choosing loans can be important as this gives students time to find a good job before being hit with loan payments. Calculating out exactly what payments will be and how long it will take to pay off loans is a responsible thing to do when applying for the loan in the first place.

The most important thing parents can do is to sit down with their students and help them to understand exactly what a student loan will mean for them now and at graduation. Student loans can be essential in helping many students to get the education that they need to be successful in a chosen career path. They can also be a burden in the years following graduation so it is important to plan ahead for that time and how student loan payments will factor into your financial plan.

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