A student loan is basically a form of financial assistance designed to assist students to pay for college education and the related fees, including tuition, publications and supplies, and living expenses while attending college. A student loan typically has an interest rate attached to it. This rate is set by the federal government and may be tied to the cost of borrowing or may depend on the credit status of the applicant. Usually, all student loans have an interest rate, but some private schools do offer credit options based on income level. Interest rates on these types of loans are usually quite high.
Most student loans have an academic repayment structure. This means that the loan must be paid back according to a certain schedule and amount over a fixed period of time. The exact amount and frequency of repayment will vary depending on the lender, the student and his/her financial circumstances. Typically, a borrower must repay a portion of his/her loan debt during the time he or she is attending school. Some lenders allow a student to extend his or her loan repayment schedule if financial circumstances change, giving students a bit more breathing room before repayment begins.
For many students, financing a higher education is out of reach, thanks to a recent economy that has caused millions of Americans to lose their jobs and their homes. In order to help students more financially, the government has introduced the Federal Perkins Loan Program in an effort to provide extra money to qualified borrowers who need it to pay college tuition. The Federal Perkins Loan Program offers federal financial aid to parents who contribute to their children’s educational costs. The program, also called the Federal PLUS loan, has a set structure which allows a parent to send one student to the college at no cost. In addition, parents may also borrow amounts above the minimum required by law based on their income and family status.
Private student loans generally have much stricter student loan requirements. For example, a cosigner is not needed with these loans; therefore, private student loans generally carry a higher interest rate than do those from the federal government. If you are applying for federal student loans, you will generally be required to fulfill different student loan requirements depending on your income. Some private student loan requirements include income, credit history, and country of birth.
A good reason to consider both options is to find out what repayment options are available to you. The most common student loan repayment plan is the standard six-month grace period following graduation. Students who complete a federal student loan consolidation plan or an extended program have the ability to choose an automatic repayment plan through the federal government once they start earning their first federally subsidized loan. The repayment starts the following year, with the first monthly payment made around six months after graduation.
Students who qualify for subsidized and unsubsidized student loans can use one type or the other. Each type has its own set of pros and cons, so it is important to discuss these matters with a representative from each type before making any decisions. When you apply for unsubsidized student loans, your eligibility depends on your FAFSA application. Subsidized loans require that you qualify based on need.
If you borrow only part of the total cost of your education, then you might want to borrow more than the standard six-month grace period offered by federal student loan programs. This is possible since federal loans are subsidized. However, you will pay a higher interest rate for the extra money you borrow. Because most private student loan lenders don’t offer subsidized loans, students may have to look for private lenders to borrow extra money to pay for school.
Most private student loan debt consolidation companies do not require borrowers to cosign the loan. However, some do require borrowers to co-sign the loan. Some lenders do not charge additional fees for cosigning the loan. Therefore, borrowers should always shop around before deciding if they are better off with a company that does not require cosigners.