Going to college often depends on the student’s ability to afford it. Sometimes, students can get scholarships or save money to pay for college. However, most students don’t have the means to pay for school readily available and will need to take out one or more student loans.
Generally, these students have a passion for moving forward in life, a determination to establish a successful career, and an eagerness to contribute to economic growth. They still fail to grow and fulfill their academic and professional dreams with all this by their side.
The reason is the lack of funding. To acquire a top-notch education and complete a degree program from a well-reputed institute, one needs to have strong financial backing, something not many students have. This is where student loans come into the picture.
Student loans have helped millions of students reach their career goals and are still helping shape the world’s future. Those who are about to make one of their biggest decisions need to start by fully understanding these loans.
After completing high school, students opt for financial assistance from the government or private entities. These loans are a form of financial assistance that a student uses to pay for all the fees associated with their education. These include, but are not limited to, tuition fees, books, school supplies, living expenses, and all other expenses related to their education.
Students can repay these loans after their grace period ends. The grace period is the time that a student takes to complete his college education. Once this period ends, students need to start repaying the loans.
There are many types of student loans a person can take out. Deciding to take on this debt will be easier if you understand the different loans available for higher education. Here are six types of student loans you should consider.
Federal Loan
The federal government gives federal loans to students who cannot complete their education. There are three major types of federal loans: Stafford’s, federal, Perkin, and Federal Plus loans.
Stafford Loan
The government offers federal Stafford loans, which are funded by government assets and offer perks such as lower interest rates and a favorable repayment structure. These loans are not a burden for students, and they are given a specific period to complete their education.
There are two types of Stafford loans:
Subsidized Loan
These provide long-term loans based on a student’s needs. They have a low-interest rate, and the government pays its money when a student is in school. These are suitable for students with financial difficulties.
Unsubsidized Loan
These help independent students, which means the borrowers, in this case, receive no additional help to pay for the loan. The borrower will be paying back their income in full.
Federal Plus Loan
The federal government funds Federal Plus loans with no middle-man. Unlike other student loans, they have no maximum limit and can be used for all forms of academic costs, including books and housing. The grace period for these loans is shorter than that for federal Stafford loans, but the rates are generally better.
Private Loan
A private student loan is a personal loan, which means that the borrower acquires the loan through their bank and credit union. These are not federally backed loans. Students require a general credit history to borrow this loan.
Private loans usually have much higher interest rates than federal loans, making them unsuitable for students. If the student is late or cannot pay, private loans will appear on their credit report, but much more is at risk.
Conclusion
Student loans are a massive blessing for students who wish to excel academically. It is best to consult a professional who can guide students in choosing the loan that suits their needs. Understanding all types is crucial, and it is better to draw a repayment plan before the grace period ends so that the process ends smoothly.
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