In my last post I talked about the process of getting a Federal Stafford Loan 
. Elizabeth had a great question about Stafford Loans not being enough to cover the cost of higher education. It's an issue that arises for many student borrowers. So here's the scoop on supplementing your Stafford Loans.
First things first. Stafford Loans might not be the only assistance you are offered in your award letter(what the financial aid office sends outlining all the aid you are eligible to receive). Some students also qualify for Federal Perkins Loans , and you may be eligible for the Federal Work-Study Program or receive scholarships and grants. So fear not, there might be more aid on the way.
That being said, there are a couple options to consider if you need to supplement the financial aid package that's outlined in your award letter.
If your parents are willing to help out, they can take out their own federal loan to cover the extra amount—the Federal PLUS Loan for parents . Parents are able to borrow up to the cost of your education (the term that's used to talk about your tuition, plus room and board)—minus what you'll already be getting in other aid (your own federal loans, grants and scholarships). Your parents could also consider home equity financing (check out Caroline's post about this topic).
If that's not an option—or if you'd rather be the borrower—you can apply for a private student loan (they're sometimes called alternative loans). These loans vary from lender to lender, but the basics are the same. They're an option for student borrowers that will usually cover up to the cost of your education. Keep in mind that these are not federally guaranteed, so the lender will usually charge a higher interest rate than you have on your Federal Stafford Loans. That rate is generally based on your credit. Lenders may require a cosigner for private loans. A cosigner (also known as a co-borrower) is someone who signs the promissory note and assumes equal liability for your loan.
Check out this comparison chart(PDF) to weigh these options. And as always, we're here to help with any questions.
I am trying to help a former student get into college. He still has a balance of 7800 on his tuition. He has federal loans and grants already. Lives with grandma who was denied PLUS loan and he was told he needs a cosigner on all the private loans he has applied for. He has noone to cosign for him. He is on his own.What else can we do? There has to be a way to get him to school.
Anonymous – First off, if his grandmother was denied a PLUS loan, he may be eligible for additional Unsubsidized Federal Stafford Loans and should check with his school if he hasn’t already. It may be a good idea to talk with the school about other options that might work as well, like a tuition payment plan, etc.
If he does need to borrow more through private student loans and does not qualify on his own, he will need a cosigner. I just wrote a post about cosigners that you might find helpful: http://blog.wellsfargo.com/StudentLoanDown/2009/08/the_cosigner_conundrum.html