Student Loans 101

For those graduated in May, the grace periods on student loans is quickly coming to an end. Within the next 2 weeks, the first payment on student loans will be due for these recent grads, but for those students still in college there is time to learn about all loan options. From federal loans to private loans, financial aid applications, and borrowing caps, we’re here to tell you what steps to take to better understand the world of student loans – Welcome to student loans 101.

University Student Begging with Mortar Board - Education Costs

Any full-time or part-time student on the path to obtaining a post-secondary education is eligible to receive a student loan whether or not they have a stable income or established credit. Unlike other types of loans, student loan lenders do not require repayment on distributed funds until the  end of the grace period granted to each borrower after graduation, or the student is considered under part-time hours at a higher education institution. Even though no one wants to take on debt, student loans are considered “good debt” because they are a direct investment on your future.

There are two types of student loans distributed: federal and private. Federal loans should be the top priority with private loans only serving as a last resort option. Stafford, Perkins, and PLUS (made by student’s parents) loans are all funded by the federal government. The first step in obtaining a federal loan is to complete the Free Application for Federal Student Aid (FAFSA) each year you are in school. This application will determine how much your family can contribute to your education. An amount will be calculated and sent to your institution’s financial aid office. Because each school is given different amounts per year, each student will be awarded a different loan amount; loans are given on a first come, first serve basis. Because of the somewhat competitive nature, it’s important to complete your FAFSA as soon as possible each year.

Each private loan has its own terms and conditions and generally has a variable interest rate on each loan. Federally funded loans have a fixed rate and offer borrowers working in the public sector special incentive programs.

By including student loan debt in your future planning, it’s important to know what your options are. We operate to help our members and our signature loans are the best way to get a better handle on loan debt. With three types of personal loans offered, we can help you get on the right track to a secure, rewarding future. Home Equity Loans are also a great alternative to PLUS loans for parents, providing them with a possible tax deduction.

Stay tuned…we’re currently in the process of partnering with Sallie Mae to help our members with student loans.

Abby Keibach
Abby Keibach

Abby Kiebach is the Chief Executive Officer at Lancaster Red Rose Credit Union. As the CEO of a community credit union serving Lancaster County, PA, she is dedicated to maintaining the strength and stability of LRRCU while providing personal member service to all current, and future, members. In her spare time, Abby loves to volunteer for a full range of local community organizations and spend time with her family.

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