What is a student loan?
College education is a must, and for that a student loan is a prerequisite. You could be buried under a mountain of debt if you donâ€™t do the smart thing and choose the best option available in the market. Although there is a wealth of information on the Internet, not all of it is useful, and to protect you, here are a few guidelines to follow while selecting the best finance plan for your education,
Federal student-loan programs are sanctioned every year by The U.S. Department of Education to the tune of more than $67 billion in loans, grants and campus-based aid to assist students and their families to pay for post-secondary education. This will give you a quick idea of what is covered under the federal-loan scheme.
o The Federal Stafford-Loan is issued in the name of the student, is based on need of the student and does not require a credit check as it guaranteed by the government and a private backer. The best part of this loan is that thereâ€™s no need to repay this loan until after graduation, or if the student leaves school or is attending part time.
o Federal PLUS loans are made in the name of the parents. These loans require a credit check but the credit criteria are not as strict as other types of consumer loans. Repayment of a Federal Plus Loan usually begins after the student has passed out of the college and started working.
o The Federal Graduate PLUS is just like the Federal PLUS loan, except that it is made in the name of the student.
One of the most affordable student loans are Federal student loans, which include Stafford loans for students and PLUS loans for parents. Infact, interest rates for these Federal student loans are drastically lower than those of personal loans, credit cards, car loans, housing loans and even mortgages!
Private Education Loans If scholarships, grants, work-study and Federal student loans programs are still not sufficient for covering all your student expenses of food, clothing, housing and education, then, Private Loans, also called as an alternative loan, are available to the student.
o These private loans are personal credit-based-loans, which are not guaranteed by the Federal government. However, the lending limits are higher than Federal student loans, but the interest rates may be significantly higher than Federal Aid programs. But it will definitely help you complete your finance aid program for your education.
o Private loans can be used for all you expenses and not only education but also fees, books, housing, computer, travel, food and daily expenses! If you wish to apply for a private loan yet have no good credit history or poor credit, itâ€™s a sensible option to have a co-signer who has a strong credit back ground to improve your chances of getting approved for a private loan.
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Every student who starts on the road to a university education this year, will need a student loan that they can receive from the government or from a private facility. But thereâ€™s no need for worry, for with the proper guidance getting a student loan is as easy as ABC.