Paying for a college education can be a very expensive venture. Tuition, books, fees, housing, utilities, cell phone bills, food, car payments, insurance, it just keeps on going and going. As a student, you are trying to balance school, possibly working and paying for all of these expenses. Most college students think the easiest way to easy this burden is a credit card. They think that putting all of their expenses on their credit cards is the best solution.
The truth is this is that one of the worst ways to deal with your expenses. Here at EdFed we want you to know about a much more convenient and less expensive way to fund your schooling: federal student loans. Federal student loans have many advantages over credit cards.
Federal student loans have much lower interest rates than credit cards. As of right now, the average interest rate on a credit card can vary from 10% to 13%. What's even more surprising is that if you take out a student credit card, the rate can hover somewhere as high as 17%! These rates are amazingly high and cause you even more trouble when it comes to escaping your college debt.
On the other hand, federal student loans have much lower interest rates. A federal Perkins loan has a low 5% interest rate. Stafford loans have an interest rate of 6.80%, and federal PLUS loans carry an interest rate of 8.50% or 7.90%. Interest rates are a game of numbers and as you can see from this comparison, federal student loans win.
Deferment and Forbearance
With credit cards, you are required to pay off the card regardless what your financial situation is and in spite of any financial hardships that may fall upon you. Credit card companies figure you got yourself into debt so it's up to you to get. Federal student loans however, are different.
With federal student loans you are given a deferment and forbearance options. These options allow you to temporarily suspend payments on your loans during financial or other hardships that may hinder your ability to make your monthly payments.
You Can Consolidate Your Student Loans
One of the largest differences between federal student loans and credit cards is the ability to consolidate all of your federal student loan debt. When you choose to consolidate through EdFed, we lock you in at a low, fixed interest rate allowing you to dodge rising variable interest rates. Plus, with our added borrower benefits, your interest rate can reduced even more! This allows you to save almost 50% off of your bill each month! Moreover, when consolidating with EdFed we make it easier to pay your bills. By combining all of your loans into a single consolidation loan, you are only responsible for one, low monthly payment.
Once you have consolidated your federal student loans, the benefits over credit cards become even more profound. With many credit cards, you must pay a high monthly amount, no matter how much debt you have. With a consolidation loan from EdFed, your repayment period is tied directly to how much you have in student loans. Depending on how large your consolidation loan is, you can have anywhere from 10 to 30 years to repay your loan. When you consolidate your student loans through EdFed, we offer you a repayment plan, allowing you to take control of your financial future.
When dealing with your college costs a credit card might seem like a tempting, easy way to put off paying your bills. But in all reality, the high interest rates of credit cards will quickly have you dealing with more debt than you bargained for. Rather than signing up for credit cards, take out student loans to finance your education. With lower interest rates, forbearance and deferment options, the ability to consolidate with long repayment periods, why wouldn't you choose student loans?
Article Title : Federal Student Loans compared to Credit Cards
Comment not found for this article.
Share this story:
EdFed introduces… Awareness… Learnal
At, EdFed, we proudly introduce 'articles on student loans' and 'Learnal - the journal to learn from', our free newsletter on student loan management, which is sure to keep you informed of the latest events and happenings in the student loan market. To receive your copy of the above just use the RSS feed below and add this to your "My Yahoo", blogs, newstickers, and other similar channels accepting distributable content.
Click here to sign up for our Weekly Newswire now!
How EdFed Helped others!
I started my application on the 5th of September. I was called that same day by a loan officer which was actually great because then I wouldn’t have to wait on the phone which I have had to do with other companies. My loan officer had everything ready she went over my monthly payments and interest rate. I was able to sign my application on line that same day. I am indeed grateful for all the help. Thank you EdFed. - Alexia F. Ft. Lauderdale, FL
Student Loan Consolidation Info - How to Choose the Right Loan Company
The Career Resources column is presented by Granted, America's leading job search engine dedicated to getting people jobs.
Education is one of the most basic right of any human, but with the increase in prices and the costs involved in education this has made these rights turn into a privilege which very few can enjoy. Any normal person today in the whole of United States has to take an education loan at one point of time to pay for their education fees.
Our borrower-benefits package is designed to help you save by reducing your interest rate by 1.25%. Using auto-debit to make your monthly payments will ensure you make on-time payments and thus help you toward the goal of 36 on-time payments, guaranteeing you thousands of dollars in savings.