A student loan is to help students pay for college tuition, books, and living expenses. It differs from other types of loans in the interest rate which is considerably lower and the repayment schedule is deferred while the student is still in school. There are many types of student loans to choose from, and it’s important to find one that is right for your particular situation. The two major types of loans are:

1. Federal loans
2. Private loans

Three main types of “federal loans” are:

• Stafford Loans: It is a student loan offered to eligible students enrolled in accredited American institutions of higher education to help finance their education. Stafford Loans are available both as subsidized and unsubsidized loans. Subsidized loans are offered to students based on demonstrated financial need. Unsubsidized Loans, students are responsible for all of the interest that accrues while the student is enrolled in school.

• Plus Loans: These loans are available to parents whose children are attending college as full or half-time undergraduate students.

  Interest rate is low on this type of loan, and repayment usually begins within 60-90 days after full disbursement of the loan, or after the student graduates.

• Perkins Loans: It is a need-based student loan, to assist college students in funding their post-secondary education. Loans carry a fixed interest rate of 5% for the duration of the ten-year repayment period. It has a nine-month grace period, so that borrowers begin repayment in the tenth month upon graduating, falling below half-time status, or withdrawing from their college or university.

Two types of “private student loans” are:

• Direct-to-consumer private Loans: These loans are not certified by the school and neither school interacts with this type of loan at all. The student simply supplies enrollment verification to the lender, and the loan proceeds are disbursed directly to the student. Direct-to-consumer loans carry higher interest rates as compared to school-channel loans. These types of loan allow families to get access to funds very quickly in some cases.
• School-channel Loans: This type of loan offers borrowers lower interest rates but take longer to process. School-channel loans are “certified” by the school, which means the school signs off on the borrowing amount, and the funds are disbursed directly to the school.

Related Articles

• Student Loans for College Education
  It is very difficult to pay the college fee in this century. It is very important to do a part time job or a business to support your studies if you are not getting any scholarship or any fund from any organization. Try to do any part time job to continue...
• Ten Ways To Finance A College Students
  Due to the current financial constraints and high inflation, families have only one option to continue their children education. That is, to borrow money from some government or private institutions. There are many types of student loans, grants and schol...
• Student Consolidation Loan
  Student debt consolidation loans are worth to have if you are a student and having more than two debts with inability to pay off all these debts. Student debt consolidation loans merge all debts into single, thus make it easier for students to repay their...
• Student Loans Without Cosigner
  There will be few students in American that can afford college education from their own pocket while on other side majority of students needs any financial assistance. When student are planning for college the biggest obstacle they face is about college l...
• Alternative Student Loans
  There will be only few students that can afford to pay from their own pocket for college in America. While most of student’s needs financial support to continue their studies, that’s why majority of student apply for student loans.Alternative loans are go...