STUDENT LOANS

Let us start off by knowing ”what are student loans?“

We can define a student loan as a loan originated by the government or a private bank for educational expenses.

Loans & Debt Consolidations

Click Here! for student loan and their consolidation and other help with loans

The two main types of student loans are federal loans and private loans.

There are three main types of federal loans:

1) Federal Stafford Loans

The Federal Direct Loan Program or a participating lender issues a federal education / student loan. There are two types of Stafford Loans-

    a) Subsidized Stafford: This is a need-based, low-interest student loan that is subsidized by the federal government. The federal government pays the interest that accrues on subsidized deferment, and post-deferment grace periods (if applicable), if the loan meets certain eligibility requirements. Interest and payments on the loan do not begin until after the student graduates or leaves school.

    b) Unsubsidized Stafford: This student loan is made available to students regardless of need. The interest may be capitalized as long as the student is attending school for at least half the time. The payments of principal and the interest begin once the six-month grace period expires. Unsubsidized Stafford loan start accumulating interest from the day the money is disbursed.

2) Federal plus loans:

        It is a federally guaranteed student loan program that allows parents to borrow funds to help pay educational expenses and it is a long-term, variable interest rate federal loan. This loan enables parents to borrow funds for children's educations, without passing a credit check. These loans are overseen by the Department of Education through private commercial lending agencies. There is no set limit on the amount of Federal PLUS funds that a parent can borrow; but, the loan cannot exceed the student’s portion of the cost of education minus any other aid the student receives and the repayment generally commences immediately after the entire loan is disbursed.

3) Federal Perkins Loans:

It is one of the several federal loan types that are available to help students meet their financial needs for higher education and they are need based and they carry low interest rates and may be offered by a college as part of a student's financial aid package. This is available for both undergraduate and graduate students. It is federally funded. Students do not have to apply for this separately as it is awarded to eligible students as part of an aid package at the college.

There are other kinds of loans too and these are:

Federal Family Education Loan Program (FFELP)

Parent Loans for Undergraduate Students (Parent PLUS)

Graduate PLUS Loans

Work Study loans

Just a point of advice:

Generally Federal student loans are far better than private student loans because they offer much lower interest rates and since we all know that if we take out a lot of loans to pay for our education, having a lower interest rate will save you lots of money in the long run.

The eligibility criteria and the process of applying for these can easily be found out on the internet as there are many financial companies who are willing to help students with these loans.