Student loans

There are several options for college money for single moms and working moms. The important thing is finding the right option for you. As a mom, you're very busy balancing motherhood with your studies and career, so we've compiled some basic information to help you narrow down your options for student loans. There are two basic options, federal and private funding.

Types of Student Loans

Subsidized Stafford loans are awarded on the basis of financial need. The federal government pays the interest on the loan until you begin repayment which begins after a six-month grace period after you graduate, leave school, or cease being enrolled as at least a half-time student.

Unsubsidized Stafford loans are awarded without regard to financial need. Interest accrues from the time the loan is disbursed until is it paid in full. Repayment begins after a six-month grace period after you graduate, leave school, or cease being enrolled as at least a half-time student.

Parent PLUS loans are credit-based loans for parents of dependent undergraduate students. Parents may apply for these loans, and if approved, may use the funds to offset educational expenses. Repayment generally begins 60 days after the second disbursement.

Federal Perkins loans are awarded to students with exceptional financial need. Interest is at a low 5 percent and repayment begins after a nine-month period after you graduate, leave school, or cease being enrolled as at least a half-time student.

Alternative Student Loans

Private student loans are loans offered by private lenders. There are no federal forms to complete and eligibility often depends on your credit score. If you qualify, it can help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs.

Peer-to-peer lending, a recent innovative way of providing college funding, is a nontraditional form of lending involving unsecured loans between individuals. This is in contrast with traditional lending, where a bank or other financial institution makes loans to individuals.

Consolidation Loans combine several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. It is very similar to refinancing a mortgage. Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Some lenders offer private consolidation loans for private education loans as well.

Federal law sets the maximum interest rates and fees that lenders may charge for federally-guaranteed loans. However, nothing prevents a lender from charging lower fees and many lenders offer a variety of student loan discounts to attract borrowers. Loan forgiveness programs (in which the borrower's loans are paid off in exchange for volunteer work, public service or military service) also offer an option for easy repayment.

Few students can afford to pay for college without some form of education financing. According to the 2003-2004 National Postsecondary Student Aid Study (NPSAS), two-thirds (65.7%) of 4-year undergraduate students graduate with some debt, and the average student loan debt among graduating seniors is $19,237 (excluding PLUS Loans but including Stafford, Perkins, state, college and private loans). The median is $17,120; one quarter of undergraduate students borrow $24,936 or more, and one tenth borrow $35,213 or more. For federal student loan debt (excluding PLUS Loans), the figures are 62.2% and $17,036. Average cumulative debt increases by about 3% or approximately $550 a year. When one includes PLUS loans in the total, the average cumulative debt incurred is $21,899. Approximately one in ten (10.8%) parents borrow PLUS loans for their children's college education, with a cumulative PLUS loan debt of $16,317. Preliminary data from the 2007-08 NPSAS suggests that the average amount of debt among undergraduate seniors at 4-year institutions has increased to about $22,500.

For single moms and working moms with the dream of starting or continuing college, making that dream a reality is a matter of focusing on your goal and pulling together all your resources. It is most definitely a major challenge and one that will put to test your resolve and commitment to making this happen. Whether you are tackling this by yourself or have the support of family and friends, the most important factor in your success is you.

Help, in the form of student loans, free grants and scholarships and other financial aid, is available, you just have to apply. Don't give up. Don't allow yourself to be your own roadblock. Take the step, and move towards your future.

Check out our registration page and enter to win. You may qualify for our free $10,000 scholarship to get you started.