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Student loans

by professionalseo

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                                      Student Loans – 
                                A Financial Help 
                                   For Students

The cost of education has increased by leaps and bounds. In such a situation, unless you have the option of grants and scholarships or student loan, you won’t be able to pursue your higher education. Student loans are mainly a financial help option for students to fund various expenses related to their education like tuition fees, books, living expenses, etc.


These loans are quite different from that of other loans as the interest rates are quite low. Also, the repayment schedule is deferred while the student is pursuing the course. Also, it should be noted that student loans do not get discharged if you file bankruptcy.


While taking out student loans, the borrower has to sign the Master Promissory Note. It is an agreement between the lender and the borrower regarding the repayment of the loan. This is a legal contract.


Types of student loans

There are mainly two types of Student loans:


•    Private Student Loans – This includes loan which are offered by state-affiliated nonprofits and institutional loans provided by schools.


•    Student loans sponsored by the Federal Government – Most of the student loans available in the country are sponsored by the Federal Government. Such loans are both subsidized as well as unsubsidized. It should be noted that in case of subsidized loans, interest does not accumulate during the deferment period.


Before the year 2010, the federal student loans were further divided into two types:

•    Direct loans: These loans are the ones which are originated as well as funded by the federal government.


•    Guaranteed loans: These are the ones which were originated by the private student loan lenders but were guaranteed by the government. This loan program got eliminated in the year 2010. The main reason behind this was that they did not help students in reducing education costs and the lenders rather looked for their own profit.


Eligibility criteria to qualify for student loans

Most of the students studying in various colleges can qualify for student loans. All of them will be able to qualify for the same amount of funds at the same interest rate irrespective of their credit history and their own income or their parents’ income.


Cost of the student loans

The private student loans are costlier than that of the Federal Student loans. The main reason for this is that private student loans are not insured by the government. Though the federal student loans are less expensive; they still help the government to generate a good amount of money as profit. This is mainly because the interest payments for these loans exceed the borrowing and other associated costs of the government.


Repayment of student loans

The repayment of the student loan mainly starts 6-12 months after the student completes his or her education. The rate of interest of the Federal student loans are mentioned in § 20 U.S.C. § 1087E (b). There are various options available to the students in order to extend their repayment period. Extended payment period and federal loan consolidation are two common options in this regard.


So, if you are planning for higher education and looking for finances, consider taking out a student loan.

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