The Lowdown On Student Loans
By Joseph Kenny
Getting an education is hard work and financing that education can be daunting if you don't know how to go about it. Even if you have scholarships and grants (money that is given to you and doesn't have to be repaid), there are still expenses that you may not be able to cover. You may need a student loan.

Sometimes you can borrow the money for your education from the school you're attending, but more often, you'll have to choose a lender. The federal government is by far the least expensive of these! There are two kinds of federal loans (formerly known as Guaranteed Student Loans), the Federal Family Education Loan (FFEL) and the Federal Direct Student Loan (FDSL).

When you obtain a FFEL, you borrow the funds you need from a credit union, bank or other financial institution of your choice and the government guarantees the loan. If you renege on your student loan, the federal government is obligated to repay it. A FDSL loan is borrowed from the feds through the Department of Education.

If you choose to borrow from a bank or credit union, you will be applying for a character (or signature) loan. This type of loan is made when the bank is so certain that the borrower will repay the loan that no collateral is required, merely a signature. You will need either an excellent credit background or be a customer of long standing to obtain a signature loan. The interest rates will be higher than a federal student loan but still much lower than the usual consumer loan.

Generally, you will not have to repay a student loan until after graduation. But what if you can't repay it? Your options are severely limited in such a case. Before 1998, people were sometimes able to discharge their by declaring bankruptcy but this is no longer allowed.

Permanent disability or death are acceptable reasons for not paying your student loan. If the school you're attending closes before you graduate, you may be able to discharge your federal

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