Many students need to borrow money to fund at least part of their cooking school expenses. Before borrowing any money, however, you should be aware that student loans cannot be discharged in bankruptcy, and if you have trouble paying them after graduation there is no remedy under the law. So be careful not to take on too much of a debt burden, and know the terms of any loan before you sign on the dotted line.
With that said, the federal government has done everything it can to make student loans affordable and available to all who need them. The first step you will need to take is to fill out the free application for student aid (commonly called FAFSA). It can be completed online for your convenience.
This form will help you determine whether you qualify for federally subsidized Stafford loans, and if so, for how much. It may make a difference if you are attending a two-year cooking school or a four-year college. Check with your financial aid officers or a government loan representative. Specific rules on college loans are in a state of flux right now, as the Department of Education is taking more of the responsibility for administering loans onto its own shoulders.
If you do qualify for Stafford federal student loans, there may still be a shortfall between your student aid package and your total costs. In that case, you may wish to consider taking out additional loans, such as a PLUS loan or a private bank loan. You will most likely need the assistance of a family member to take out supplemental loans, because they carry a higher interest rate (sometimes considerably higher) and you may need to begin repaying them even before you have graduated.
To avoid going into debt on these terms, or if your parents are unable or unwilling to assume this burden, you may wish to consider one of several newer options. One is to take out what is called a microloan. A microloan is a formal loan with a signed legal contract, but it is offered through an individual (maybe a family member or friend) who agrees to loan you the money at a lower rate or on more favorable terms than you could get from a bank.
Under current economic conditions, when interest rates are extremely low for savers and investment returns are uncertain, some people are only too glad to loan money to people they know for a modest profit. If you don’t happen to know anyone who would be willing to loan you the money, you may still be able to borrow from a stranger, through a peer-to-peer lending service that sets up lenders with borrowers. If you opt for this relatively new financial route, be sure to consult with a lawyer before you sign anything.