Paying for schooling can be hard for aspiring teachers and teachers who are trying to continue their education. However, there are many different forms of aid available to help cover education costs. Here are some of the most commonly used financial aid options for teachers.
There are two fundamental types of student loans: those sponsored by the federal government and loans taken out through a private lending institution. There is a third alternative, peer-to-peer lending, which is becoming more popular each year. Before you decide on the type of loan that will work best for you it’s essential that you research the benefits and potential downside of each.
Federal Government Loans
Student loans taken out through the U.S. government are called Stafford loans or Perkins loans. The money comes directly from the United States Department of Education. If you qualify for a government loan, the money will come to you through a participating school. However, you must meet certain criteria before you’re considered eligible for a federal loan. The first thing that you need to do to qualify is to be enrolled in an accredited college or university. You can also qualify by enrolling in a trade, career, or technical school. As a general rule, Stafford loans don’t have to be paid back until after you graduate from college. However, if you leave school without earning a degree, it’s possibly that you could be required to start paying the loan back immediately. You will have to fill out an FAFSA (Free Application for Federal Student Aid) and go through a review process before being accepted. Another federal loan program, the Perkins loan program, is need-based, and carries a fixed 5% interest rate throughout the length of the loan term, which normally runs for 10 years.
TEACH, a Federal Program
TEACH (Teacher Education Assistance for College and Higher Education) is aimed at those who would like to teach at a public or private school for low-income families. It is a grant program designed to help defray the cost of receiving your teaching degree. To qualify, you must be willing to teach four full academic years out of the next eight at a school that encourages enrollment by low-income family members. This money is in the form of a grant, so it won’t have to be paid back unless you don’t meet their criteria. If you back out of the agreement, that money will become an unsubsidized student loan and the funds will need to be paid back, with interest. Part of the criteria for TEACH is that you must be willing to instruct low-income children in high demand subjects such as mathematics, foreign languages, reading, science, and special education. To be considered eligible for a TEACH Grant, you have to fill out the FAFSA. However, there is no need to prove that you have a financial need in order to be eligible.
A private loan is the type of loan you would get from a private financial institution, such as a bank or credit union. Money from a private loan need not be designated specifically for your college education, it is merely money loaned to you with the expectation that it will be repaid, with interest, at agreed upon terms. While the terms of a federal loan are pretty standard, the terms of a loan through a private lender can vary quite a bit. A private loan is almost always determined based upon your credit rating. If you have a good credit score, your interest rates can be fairly low. If you don’t have good credit, your rates could be very high–you may even be asked to provide a cosigner. The terms for a private student loan are left entirely up to the financial institution you’re dealing with–you either take it or leave it.
Peer-to-peer lending is fast becoming a popular method of securing a student loan. Essentially it is a financial agreement between two parties–a financial lending institution is not normally involved–whereby one person borrows money from another. Once the terms are agreed to, the borrower is expected to repay the loan within a predetermined time frame–with interest. A peer-to-peer loan is a formal agreement, usually requiring the borrower to sign a contract laying out the terms of repayment. Most people that take out a peer-to-peer loan instead of borrowing from a bank or the government have a poor credit rating or low grades that aren’t high enough to qualify for a government loan.
Guest post from Karen Schweitzer. Karen writes about online schools for BestOnlineColleges.com.