Student Loans for Low Income Families
Obtaining student loans for low income students and families is possible through both federal and private sources. While your credit and financial status may prevent you from attaining some types of loans, student loans are often available on a need basis. This means your ability to pay for college tuition for yourself, your spouse or your child will determine your loan limits and interest rate rather than your income.
Stafford Loan Program
The Stafford Loan Program offers federal student loans to both independent and dependent students. The loans are available at the undergraduate and graduate level, and they are dispersed on a need basis. Independent students, those not getting support from a family member, will qualify for higher loan limits. Also, many people, usually the neediest students, qualify for a subsidy on their loan. The subsidy is a governmental condition that will outright pay for a portion of their tuition, without assuming an interest rate on the loan. Even unsubsidized loans have low interest rates. You will have to prove you are creditworthy for this loan, but your creditworthiness will depend more on your debt to asset ratio than on your actual income as an individual or a family.
PLUS Loan Program
The PLUS Loan program is an option for parents who are borrowing on behalf of a child to pay for tuition or other education expenses, such as books and room and board. The PLUS loan program also assists students in directly paying for a graduate education. PLUS loans are not entirely need based, they also rely largely on a loan application proving the borrower is worthy of the credit extension. If you have good credit, you will likely be able to take out a PLUS loan on behalf of your child. The one important thing to remember is these loans mature much quicker than other types of loans. While loans to a student generally provide a grace period and deferral options in case the student does not immediately have a salary, loans to parents often do not have this protection. Parents will be expected to start repaying the loans immediately, sometimes before a student even graduates college.
Private Student Loans
Federal options are not the only choices for low income families seeking student loans. In fact, they may not always be the best options. Private loans are traditionally more flexible. For example, you can only consolidate federal loans with other federal loans, but private loans can be refinanced and consolidated in many different ways. Another key benefit is private loans typically only require one application. Federal loans will require a student to re-apply each semester or each year. If you have a low income, you may still secure a private loan if your credit is good. You can secure the loan against collateral, like a car, in order to reduce the interest rate. You may even be able to get a better rate than on your federal loan if you are willing to secure the private loan.