With the soaring college expense, many college students need College Student Loan to receive their high education. To know what kind of choice on student loans is critical in order to find the right student loan plan fitting each student’s and his or her family’s needs.
In this article and next several articles we would like to understand the basics of student loans, which loans could be the best one for you, how to apply for a loan and how to get your money from the loan you are approved for.
Student Loan Basics
Our first step is to understand the fundamentals of student loans.
What are student loans?
Student loans are the money you can borrow to help pay for your education. Student loans are typically used for two- or four-year colleges and universities, trade schools or career schools. There are two main types of student loans: federal student loans and private student loans.
Federal Student Loans
Federal loans come from banks that are guaranteed by the U.S. government to allow students and parents to borrow and repay with interest. These are usually the loans you would better to try to get first, since they typically have the best loan terms. In order to get federal student loans, you must complete a Free Application for Student Aid (FAFSA) to apply for a federal loan. Stafford loans, PLUS loans, Federal Perkins loans are the common Federal Loans.
Private Loans are also called Alternative Loans. When federal loans are not enough to cover the complete cost of an education, some people usually turn to private loans. Private loans are usually based on income and credit history rather than economic need. Private loans typically offer more money than federal loans but are also generally more expensive to pay back.
Do you need a College Student Loan?
Be realistic to your family financial situation. Remember that college costs are not just about tuition, room and board. College expenses like books, laundry and supplies can be a big portion as well. Plan college early and well financially.
Can you afford a College Student Loan?
Student loans are designed to fit various types of financial situations. Remember you will always pay back more than you receive, since you need to pay the interest. Some loan plans don’t start repayment until after you graduate; others put you on a repayment plan immediately. In addition, most loans have additional fees, such as origination and processing fees. Only borrow what you need, and always examine the terms of your loan carefully to fully understand what you’ll be paying back over the full term of your loan.
Learn about the key differences between student loans you can receive from the government and a bank or private lender.
Repayment of your College Student Loan
Being a responsible borrower requires paying your loan back in a timely manner and under the terms that you agreed to when you applied.
Student loan repayment depends on what type of loan you have, federal or private. Your school, bank or lender will send you detailed information about your repayment schedule terms and start dates. You will usually make monthly payments once your repayment schedule begins. The amount depends on the size of your debt including interest and the length of the repayment plan you choose.
In next article, we will continue to discuss on College Student loan, especially, we will look into each type of Federal Loans, how to apply it and how to receive it.