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Student Loans


Types of Student Loans available

It is important to ensure you opt for the apt student loan for your requirement. You need to have the basic information and details of the different types of student loans available and make a choice after carefully going through the eligibility of these loans. You have a choice between different federal student loans and also private student loans.

1. Direct Subsidized Federal Loans:

The direct subsidized federal loan is also termed as the ‘Stafford loan’ and is definitely different as compared to the unsubsidized loan. The Education department, with the subsidized loan, covers the interest that is accumulated on your loans when you are enrolled in half time school at least.

Undergraduate students who are eligible for this loan need to prove the financial need. The schools you are admitted in can give the details of the amount which can be borrowed in the specific award letter. These loans have repayment options which can be termed as ‘favorable’ with low rates of interest. These are apt as there is no requirement of any collateral r a credit check. Consolidation of these loans after graduation makes repayment easier.

2. Direct unsubsidized Federal Loans:

The unsubsidized federal student loans are available to professional and graduate students. These loans are not based on any merit or financial need. The eligibility factor is considered lenient. In case of not being able to repay the loan on time, the interest gets accrued, that is, it is added to the principal of the taken amount.

3. PLUS Student Loans:

The PLUS loans are available not only to graduates but also to parents. The PLUS loans for parents are for the parents of undergraduate students who are dependent on them. The Grad PLUS loans are for the individual graduates. These student loans are also funded by the federal government but unlike the traditional student loan there is no limit to the mount applied for. These loans can be used to cover any education which is not covered by the traditional student loan. Another positive of the Plus student loan is the fixed rate of interest.

You need to ensure that the repayments are made within a fixed time period of 6 months after you leave school.

4. Private Student Loans:

Many private lenders customize the options available for student loans. Besides the fixed rates of interest, there are many lenders who offer a variable interest rate. This loan works apt if you have a credit history considered ‘strong’.  The interest rates work out lower. The different options for repayment of the loan ensure you can manage the monthly budget comfortably.

The major drawback of the private student loans is that these are not subsidized as some of these require repayment to be made while you are yet studying.

The major difference between private loans and federal student loans is the eligibility and the rate of interest. Undergraduates those who opt for the federal loan needs to go through a credit check.