Federal Student Loans

New reports show that students are relying on federal student loans to finance their college tuition as private student loans become more difficult to obtain. The reports, issued by the College Board, show that private loans fell a whopping 52 percent in the 2008-2009 school year as a result of the financial crisis along with tightened credit standards.

Private student loans are traditionally more difficult to obtain than federal loans because of their higher interest rates and stricter guidelines for approval. It is for this reason that they are typically a last resort for students who don't qualify for the financial-need driven federal loans. With that being said, students still took out an estimated $22.8 billion private loans in the 2007-2008 school year; however, by the next school year, that number dropped to $11 billion.

To offset the drop in private student loan availability, the federal government attempted to boost student lending in government programs. As a result, federal loans jumped 15 percent in volume, making the total number of federal student loans in the 2008-2009 school year $84 billion. It also helped that as parents lost their jobs, they were able to qualify for a broader spectrum of student loan options for their children.

But even with President Obama pumping funds into non-repayable federal financial aid like the Pell Grant, it seems students still don't have enough to work with due to tuition increases. According to the College Board reports, the average tuition at four-year public colleges and universities in the United States rose 6.5 percent in the 2009-2010 school year to $7,020, while tuition for private institutions rose 4.4 percent to $26,273.

So now students, just like unemployed workers, are left scratching their heads as they try to work their way through a system that, while deemed a necessity, seems to lack the resources necessary to successfully participate.

Have you or your child had difficulties obtaining private student loans this school year?

If you're going back to school for the first time in years and are looking for a way to pay for it, the prospect of student loans may have crossed your mind. It's an extremely common way to pay for tuition and is likely to be a way for you to cover at least part of your tuition costs.

But dealing with student loans is not always a piece of cake. You have to fill out all the necessary paperwork to qualify, and then figure out just how you will pay the loan back. The more you educate yourself on student loans, the easier it will be to deal with.

Learn the different programs out there that will help you get your degree:

Types of Academic Aides you Should Know About:

The most popular types of student loans available are Federal loans, which are available through the U.S. Government. You can apply for the Stafford Loan, which offers both need-based and non-need based loans with low interest rates. If you obtain a subsidized Stafford Loan, the government will pay your interest while you're in school. If your loan is unsubsidized, you will be responsible for your own interest payments.

Another Federal loan is the PLUS loan, which is available to parents with children who are at least half-time students. These are awarded based on credit history and cost of attendance. Students can also qualify for the Perkins loan, which are awarded to students in extreme financial need. They offer very low interest rates as well.

In addition to Federal student loans, you may take out private student loans. For instance, you might request a loan from your bank or credit union. In this case, the repayment terms are likely to be much different. You may be required to begin repayment while still in school, which is sometimes tougher to handle. Also, you may incur more interest than with federal loans. So as you think about the type of loan you want to take out, it's good to consider all the baggage that the loan brings with it.

How to Obtain Student Loans:

Federal student loans are acquired by filling out a FAFSA form (which can be done for free online). Once you apply and are accepted to your school of choice, you will receive information that maps out how much you will receive. For private loans, you will have to inquire with the private institution or individual offering them.

The biggest issue with student loans is paying them back. So it's best to only accept the amount you truly need for school so that you can lower the risk of defaulting and damaging your credit, which will defeat your positive intentions behind going back to school.

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