Going to the college is one of the most important events in the life of any student. However, due to the rising cost of college tuition fees and other expenses many students are finding it difficult to access education. However, today the banks and other financial institutions are coming forward to offer student loans. Apart from the educational loans sponsored by the banks, most of the students have to depend on the college grants and scholarships. Though the grants and scholarships have an advantage over the student’s loan, they are limited to certain students due to the shortage of funds.
Types of Educational Loans
Education loans helps to make the education plan of the student materialize. There are different types of student loans available under the category of education loans. These educational loans help to strengthen the future of the student. The types of educational loans available are
1.Federal Family Education Loan programme- here the educational loan is issued by the bank, credit union or the school.
2.Federal Direct Loan programme - the loan is issued by the department of education.
3.Private Education loans- here the loans are not endorsed by the government agencies. They are provided by the financial institutions. The private education loan programme is optimum for both undergraduate and graduate studies. However, the draw back of the private educational loans is that the rate of interest high and there is no grace period.
4.Student loan consolidation – the several loans are consolidated into one loan. This makes monthly payment easier and affordable. The repayment period is also longer.
Eligibility for Educational Loans
Educational scholarships and grants are very much difficult to get. The reasons could be many. However, educational loans are less difficult to get. The student has to first try applying for federal loan. These loans have low fixed rates of interests. For the students who are in a bad financial situation they can be eligible for Perkins federal loans. Here the interest rates are not only low but the grace period is longer. The education loans help the students to plan the life after graduation. They make the student a more responsible individual as educational loans have to be repaid after the graduation.
To obtain the educational loan sponsorship there is no particular criteria or eligibility. A student who is in need of the educational loan sponsorship can approach the authorities who provide the educational loan. The loan amount can vary from one person to another depending on the kind of education one wants to pursue. The financial counselor would be the right person to advise the student on the type of loan he would need depending on the financial conditions. The advisor would also advise the student on the repayment options. The student can either repay the amount while still in school or six months after graduation. There are institutions that offer education loans repayments upto ten years. The refund alternatives on education loans also include deferment, forbearance and consolidation. Though the educational loans are easily available, they are huge financial obligations. Therefore one should not rely on the educational loan alone for completing the education.
Interest On Education Loan
Education loan is perhaps the most noble loans of all considering that the loan is going to create and grow a student into a responsible future citizen who can contribute to the society in a big way.
American college graduates have earned $1million more than high school graduates during their entire career. This simple statistic is enough to underline the significance of education. What one must not forget, in the brouhaha of course, is that college education is quite an investment in ones future even after considering the huge expenses involved.
Where and How of Education Loan in America
The Federal Government has various student aid and loan programs, to help pay for both undergraduate and graduate education, which it helps get at low rate of interests. Here are some of them.
1.Federal Perkins Loan: This is a low interest loan (5%) and the school is the lender to which you payback. Maximum amount you can draw as an undergraduate is $4000 per year and $6000 per graduate student per year. The total amounts in each case being $20,000 and $40,000 respectively. Barring late charges there are no other charges.
2.William D. Ford Federal Direct Loan Program: An FSA program for after high school students where Department of Education is the lender. You have 2 programs, Stafford- for students and PLUS- parents. PLUS loans offered through FFEL have banks and private lenders to provide.
3.Consolidation loans: Direct loans can be consolidated for reduced and easy monthly repayment through this loan.
4.All private banks: Banks have countless schemes which are more or less similar to Federal schemes.
How Much Loan Should I Borrow
Here students and parents should sit and plan the amount to be borrowed. You can calculate loan amount in two ways. One: using an online calculator; the other way is compiling it yourself. Compiling the loan amount is not difficult with certain amount of homework. Some tips here.
1.Decide on the course and college. Public colleges charge about 1/4th of private colleges in tuition fees for 4 years degree and half of it for 2 years degree.
2.There is additional Out-of-District State Charges in case of 4 year public colleges which run into about $7000.
3.There are sundry expenses including board, books etc which run into $10,000 in both the cases.
Once you are through with calculation, visit the lender or its website for information on documentation and application.
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