Student Loans

When you have exhausted all funding options to pay for college that are free, the next step is to borrow money. Although this alternative is not the preferred method of paying for school, it might be the only way to complete your degree. Long-term career opportunities and expected earnings are greater for the accounting major than the non-college graduate, so do not be discouraged if you need to borrow money. The only disadvantage is that loan money needs to be repaid, so you should apply for federal loans first, which are cheaper than private. Student loans are provided, some based on need and some non-need based, with those people who need the most assistance receiving the most federal money. Begin by filling out the Free Application for Federal Student Aid (FAFSA) form to see how much federal student aid you qualify for. The government offers students Perkins Loans, the government option with the lowest interest rate, at 5 percent. Depending on their need, undergraduate students can borrow up to $5,550 a year, up to $27,500. The money does not have to be paid back until the student graduates from college.

Subsidized Stafford Loans are need-based, offered at a fixed rate of 4.5 percent, and the government pays the interest while the undergraduate student is in school. First-year students can receive up to $3,500 a year with incremental increases subsequently.

Unsubsidized Stafford Loans are available to most students and are not based on financial need.

The amount of this loan will depend on whether subsidized Stafford money has been received and carries a fixed interest rate of 6.8 percent. Dependent students can borrow up to $5,500 for freshman year, and independent students can borrow up to $4,000 a year, with amounts increasing in subsequent years. Students are responsible for paying the interest on the loan while they are in school, unless they decide to have the interest rolled into their principal payment while in school. Private grantors and foundations provide loan options, which could be affordable. Loan amounts vary, and eligibility requirements can be very specific toward a certain discipline or research-related topic.

Parent PLUS loans are not need-based. They are federally funded and carry a fixed interest rate of 7.9 percent. Parents, regardless of income or assets, can borrow the full cost of their children’s education, with up to ten years to repay.

Lastly, private and state education loans are provided to students with a creditworthy parent cosigner. Bank, college, and state agency loans carry the highest interest rates. Because these aren’t federal student loans, they are not subsidized nor based on need. To see what state loans are available to you, check with your state higher education agency. For a more comprehensive look at financial aid for college, check