I am looking to finance my college education, looking at financial aid and student loans. Can you explain the different options and choices?

No problem, financial aid is a more general term that can encompass student loans and more. In fact, the typical financial aid package can include the following:

• education grants and scholarships
• work and study programs
• federal subsidized student loans
• private student loans, alternative student loans, student loan consolidation

The list for the financial aid package was given in the approximate order that students should seek for. Students should always opt for and exhaust options for student scholarships and education grants first and foremost since these usually have no need to be repaid so are the best deals.

The next option to look into should be federal student loans, particularly subsidized federal student loans which will have payments and interest deferred until your graduation date. Also, another option is the unsubsidized federal student loans which still have the guarantee and backing by the US government resulting in great terms and rates for your student loan. In order to apply for federal student loans, students will want to complete their FAFSA (Free Application for Federal Student Aid) as soon as possible.

When all the previous options for financial aid such as grants, scholarships, and federal student loans have been exhausted, students can lastly look at private student loans and alternative student loans to complete their education financing. A usual requirement for such private student loans is a credit check, so students may want to check their credit history to fix any errors and inaccuracies before applying for such a loan. Also, having a co-signer, particularly one with a strong credit score and credit history, will get the student better rates and terms for the private student loan.

Students can also look into work and study programs in which students will work while going to school and earn a stipend. These types of programs usually are not available for foreign students , and eligible students are usually subject to a work hours or money cap while in school. These can be a good option for eligible students in addition to student loans to help finance a college education as well as get valuable work experience.

When one gets a student loan, are the funds given directly to the school or are they disbursed to the student?

This answer really depends on the type and terms of the loan, as the answer will vary whether the loan funds are given to the school or disbursed to the student. This goes the same with grant and scholarship money, as some are disbursed to the student and some directly to the educational institution. For some private student loans, disbursement is a flexible option, often with option of student disbursement associated with higher fees and rates.

How does credit history or credit score affect student loan applications?

There are different levels of effects that one’s credit history or credit score will affect student loans. For private student loans and alternative students loans, the student’s credit history as well as that of the co-signer, if any, will greatly impact the rates and terms of the student loans. As such, the student and co-signer should both be aware of their credit history and credit score prior to applying, and should definitely fix any errors or mistakes in the history as soon as possible. For some federal student loans such as Graduate PLUS and Parent PLUS, credit history and FICO score will be used to check against adverse financial events only and will not affect the interest rate and terms of the student loan in any other way.

What is the difference between Unsubsidized and Subsidized Federal Stafford Loans since I’ve heard both of those terms quite a bit when researching federal student loans?

Great question and very important answer. With a subsidized federal student loan such as the Subsidized Federal Stafford Loan, the government will pay any and all of the interest payments while the student is going through the educational process. The student will be required meet certain educational criteria such as attending school at least half-time and maintaining a certain educational standard. With Unsubsidized Stafford Loans and other unsubsidized federal student loans, interest will be accruing while you are still in school. With both types of loans, students will not have to make any payments while in school or during the grace period upon graduating or leaving school.

That being said, unsubsidized federal loans such as the Unsubsidized Stafford Loan will still usually have better rates and terms versus private student loans (due to having the guarantee and backing of the US government) so should still be utilized and explored as much as possible for students needing financial aid.

How should I choose the best student loan and financial aid possibilities for my situation?

In this situation as with many situations, information is gold and king. You will want to get information about all your options so that you can figure out the best course of action. Start off by getting information about scholarships and grants available to you through an online search or by visiting your college student advisor or financial aid offices to get more information. For federal student loans, you will want to fill out a FAFSA to open up your options. In terms of private student loans, there are so many choices and options out there that you will want to understand them as best as you can. You want to ask friends and family for their experiences and recommendations for financial aid and student loans. When you are collected as much information as you can and feel that you have a good grasp of your education financing options, pick the best student loan and financial aid options in an informed and rational decision.

Who are some of the top providers for student loans and student education financing that might be a good starting point for leads to explore in paying for my college education?

Here is a list of some student loan providers that you might want to look into, but in no way can we vouch for them or endorse them in any way:

• Affiliated Computer Services Inc ACS
• American Education Services AES
• Astrive
• Bank of America
• Campus Door
• JP Morgan Chase One
• Citibank
• Discover
• Education Services Foundation ESF
• Graduate Leverage
• Great Lakers Higher Education Corporation and Affiliates
• Key Bank
• Missouri Higher Education Loan Authority MOHELA
• My Rich Uncle
• National City
• Nelnet Education Planning and Financing
• Sun Trust
• Sallie Mae
• Stafford Federal Student Loans
• TERI The Education Resources Institute Inc
• US Bank
• Wachovia