Information Technology

Student Loan Options for Information Technology Students

Depending on the type of IT career you are pursuing you could be looking at a two year degree, a four-year undergraduate curriculum, or even post graduate work. IT careers can span the range for computer repair person to high-level software engineers. No matter where you goals lie in this spectrum, there are loans that can help you attain them. Student loans for IT students can come from three possible sources:

  • The Federal government,
  • State government, and
  • Private lenders.

Types of Government Student Loans

The Federal government offers three types of student loans: The Stafford Loan, the PLUS Loan (for Parents and for graduate students) and the Perkins Loan. Graduating students can also take advantage of a Federal Consolidation Loan to combine all of their college loans into one manageable loan package.

Federal Stafford Loan

Stafford Loans are the single most common type of student loan available. The Stafford Loan is so versatile because:

  • It is available to undergraduates and graduate students.
  • There is no financial need or credit score requirement to qualify for a Stafford Loan.
  • The Stafford comes in subsidized and unsubsidized versions. The subsidized Stafford Loan is reserved for students with the most need because the interest that accrues while the student is enrolled in college is paid by the federal government.  With the unsubsidized Stafford Loan, you are responsible for payment of monthly interest while in school though the principle is deferred until graduation.
  • Low interest rates.
  • Six-month grace period following graduation before repayment begins.

Federal PLUS Loan for Parents and Graduate Students

Parents PLUS and Grad PLUS are credit-based alternative loan programs designed for parents of dependent college students and for graduate students. Parents and grad students can secure a loan up to the value of the cost of their student’s attendance less any other financial aid awarded. Repayment of the PLUS Loan begins as soon as the loan is fully disbursed.

Federal Perkins Loan

The Federal Perkins Loan Program is designed for students who show exceptional financial need. The funding for this program comes from the Federal government and from the colleges themselves, and the individual colleges make the award. The secret for getting the most out of the Perkins program? Apply for your FAFSA early and apply to your college early. Colleges award loans to eligible students on a first-come, first- served basis, so you want to be as close to the front of the line as possible.

Federal Consolidation Loan Program

A consolidation loan enables graduates with one or more Federal student loans to combine all of them into one loan. This allows the student to reduce his loan payments to one more manageable monthly payment. Details are available at www.loanconsolidation.ed.gov.

Applying for Federal Loans Is a One-Step Process

To apply for any government loan you must complete the Free Application for Student Aid (FAFSA). The FAFSA is required for all forms of Federal aid programs, and it is also required for state programs and for financial aid from colleges and universities. Whether you are applying for a Federal loan, grant or scholarship the FAFSA is your first step and must be submitted early to meet any deadlines for your loan or grant applications. The application form and full information is at www.fafsa.ed.org.

State Student Loans

All states have an extensive program of student loans, grants and scholarships. To find out what your state offers, go to the website of the state higher education authority. The site will have the links to the information you need. A list of the state authorities, their websites and contact information can be found on the Department of Education website at http://wdcrobcolp01.ed.gov/Programs/EROD/org_list.cfm?category_ID=SHE.

Private Loans for IT Students

Used judiciously, private student loans are an excellent way of rounding out your funding picture. But that is precisely how they should be used – to round out the picture. Students should only consider private loans once they have exhausted their federal loan options. Private student loans may be the only loan option for necessary continuing education in IT, so it is important for IT students at all stages of their careers to understand private student loan lending.

Choosing a Private Lender

Every private bank and student loan lender offers private student loans. There is a huge array of options, with products designed for specific types of students, different interest rates, borrower fees, loan limits and repayment terms. The fees charged by some lenders drastically raise the cost of the loans, so a loan with a fairly low interest rate but high fees can ultimately cost more than a loan with a higher interest rate but no fees. Examples of the institutions that offer private loans are:

  • Private banks, such as Bank of America and Wells Fargo, and
  • Student Loan lenders Sallie Mae and Nellie Mae.

A few facts to bear in mind when you consider private loans:

  • These loans are credit-based. Students with poor credit or no credit will need a co-signor who has good credit;
  • There are often no repayment periods grace periods, which means repayment begins immediately;
  • Interest rates may be variable;
  • If there is a grace period, lender will often advertise a lower interest rate for this period, with a much higher rate when the loan goes into repayment.

FinAid’s maintains an extensive comparison chart of private loans on the market that could provide a good starting point for research. This resource is at www.finaid.org.loans/privatestudentloans.