About students loan
A student loan generally is a type of financial aid that helps students pay for post-secondary education expenses, including: Tuition and fees, Books and supplies, Living expenses and Transportation. It’s borrowed money that must be paid back with interest, usually after the student finishes school or drops below part-time status.
Why Students Use Loans
Students use loans to help cover the high cost of post-secondary education when they or their families cannot afford to pay out of pocket. Loans make it possible to pay for tuition, books, housing, and other living expenses, allowing students to attend college or university and invest in their future careers.
Types of Student Loans
1. Federal or Government Student Loans
This type of loan is offered by Federal or Government Student Loans. This loan typically have, Lower interest rates, Flexible repayment plans, Deferred payments while in school and Possibility of loan forgiveness
Key Features of Federal or Government Student Loans:
Federal or government student loans typically have low fixed interest rates set by the government, making them more affordable than private loans. Most do not require a credit check, making them accessible to a wide range of students. Payments are usually deferred while the student is enrolled at least half-time, and there is often a grace period of about six months after graduation before repayment begins.
Some loans, like subsidized loans in the U.S., have the added benefit of the government paying the interest while the student is in school and during deferment periods. These loans offer flexible repayment options, including income-driven repayment plans, and may be eligible for loan forgiveness programs for those working in public service or other qualifying fields.
Additionally, borrowers can access deferment or forbearance if they experience financial hardship. Federal loans are generally available based on financial need or cost of attendance, rather than credit history.
2. Private Student Loans
This is an education loans offered by banks, credit unions, or online lenders to help students cover the cost of college or university when federal or government aid isn’t enough.
Key Features of Private Student Loans:
Private student loans are offered by banks, credit unions, and other financial institutions to help cover education costs not met by government aid. These loans typically require a credit check, and most undergraduate students need a co-signer to qualify. Interest rates can be fixed or variable and are usually higher than those of federal loans, depending on the borrower’s or co-signer’s creditworthiness.
Repayment terms vary by lender and are generally less flexible than government loans, with some requiring payments while the student is still in school. Private loans do not offer income-driven repayment plans or loan forgiveness options, and interest often starts accruing immediately. They can, however, cover up to the full cost of education, including tuition, housing, and supplies.