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Art School Loans
The two types of loans available to college students are federal loans and private loans. Both have their strengths and weaknesses, and many students decide to utilize a mix of the two to pad their college funds. Since you're not limited to only one, it's a good idea to do some research and understand both kinds before signing the papers.
Federal loans are so named because they are guaranteed by the U.S. Department of Education, either directly or through affiliated agencies. This allows for some student-friendly terms: the governments sets a bar for interest rates, the loans are available to almost every student regardless of credit score or financial history, and there is a six month grace period, which means that no payments are required until six months after graduation. There are also forms of assistance for those struggling to pay even after this grace period, including deferment and forbearance. However, the downfall of federal loans is their relatively low limit. As of June 1, 2007, freshman undergraduates are eligible for no more than $3,500, sophomore for $4,500, and juniors and seniors for $5,500. For graduate students, the limit is increased to up to $12,000, depending on the type of federal loan and the area of study.
Federal loans fall under two broad categories. Subsidized loans are granted based on the financial need of the student in question, and for as long as you remain enrolled in college either full-time or half-time, no interest accrues while you study! Or rather, the federal government pays the interest for you. It's an amazing deal, because if you go start off borrowing $3000 to enter college, you owe $3000 and not a penny more by the time you graduate.
In other cases where the student fails to qualify, loans are unsubsidized. Interest does accumulate during your years in college; you are, however, still eligible for the six month grace period.
Federal loans come in many guises: Stafford loans, Perkins loans, Federal Family Education Loans, Ford Direct Student Loans. Each one is a bit different and targeted towards a different type of student, so it's a good idea to do some research and find out which one is the most beneficial to you.
Private students address the weakness of federal loans by offering higher limits, but also higher interest rates rates. While more significant than the interest rates charged by federal loans, they are nonetheless still lower than a nonspecific loan. Unlike federal loans, credit history does matter, and many private loans will require the student to fill out a FAFSA or some other application that provides the lender with financial information. Because of this reliance on the borrower's financial situation, many students who choose to take out a private loan will cosign with their parents in order to reap the benefits of their credit score and the subsequent lower interest rate. Depending on your family's situation, this could be a good option to consider!
Following in the footsteps of federal student loans, many private loans also offer a similar grace period, which can extend to up to twelve months in some cases (though six is far more common).
Because they don't carry the federal government's guarantee, there are far more private student loans out there than federal ones. Each lender will have their own qualifications, rates, terms, and schedules. If you plan on applying for private loans, watch out for hidden fees and terms that can trip you. Choose carefully, and the best private loans will provide you with a significant monetary boost so that you can study in your dream art school without worrying about funds.
LOAN RESOURCE SITES
Loans are a great, solid source of educational funding. They are available to almost everyone and are a time-proven asset to any student who won't allow financial difficulties become an obstacle to attaining a good education in the arts. Though we've listed pros and cons to both federal and private loans here, we reiterate again that a mix of both types can create a strong, balanced aid plan.