A college loan is arranged so as to help students pay for their university tuition, books, and living expenses while studying at college. These college loans often differs from other types of loans that one can request at any bank. These college loans are available at low rate of interest and with easy repayment solution.
If you plan to study at United States, you may choose from three different types of college loans available for students. Out of the tree categories, first two are federally economic and unsubsidized sponsored by the government of the state and the next one is private student loans. If you go for the unsubsidized loan the interest will be accrued while you are still a student and in the subsidized program you will get a little long time period when you have completed your studies.
These college loans can make a world of a difference in a student’s life. For someone with a desire to study further, and not enough financial resources to accomplish this dream, a college loan opens up doors to new possibilities. However, keep in mind that there are many different kinds of financial aid loans available for students; each with a different repayment policy, interest rate and time period allowed for repaying.
Things to know when applying for college loans:
There are many different kinds of college loans. While some of these loans may be offered as complete financial solutions, others may work as a partial support.
A loan package may include scholarships, school grants, or work opportunities. Sometimes, a bank will offer you a loan at wonderful rates, and the interest rate can either be fixed or variable.
In special cases a student may even qualify for loans from private lenders. Though slightly more risky, this works out cheaper. It is better to get a loan from someone you already know and trust, like a rich relative or grandparent.
Sometimes, for those professionals who have the desire to pursue a master’s degree but are already placed with a good organization, the company also offers cheaper loan options. However, these don’t come without limitations and boundaries. A company might require you to fill up a contract to work with them for a few years, enough for them to extract business from you more than the worth of the loan they gave to you.
College loans repayment process:
Qualifying for college loans will require you to fulfill the criteria set down by the source from which you are taking the loan. The criteria are pretty much the same – a good educational background, no other pending debts and a good college where you plan to get a higher education.
Almost all students qualify for loans in USA. The amount of loan may vary from one person to the other. Depending on several factors, like percentage achieved in the final examination, parent’s income or other financial criteria, the principle amount of loan may vary. Accordingly the student can achieve the money from the loan program.
Depending on the kind of college loans you opt for, your repayment policy will be set at the time you apply for the loan. Banks and lenders will offer you an Income based repayment plan; this is an alternative way for the students through which they can repay the amount. Once they have borrowed money as their college loans they will repay as per their earnings that they have acquired from that amount. This loan amount is no longer calculated on the amount of actual money borrowed but always has an interest rate added to it. The longer you take to repay your loan, the higher an amount you end up paying. It is advisable to clear your college loans as soon as possible after getting placed with a good company, if you don’t want to be stuck with the debt forever.
These students loan is different from the conventional loan which is available commonly at 6% interest rates (commonly higher than most home loans) and you are not allowed to negotiate. But the interest rate of an education loan is generally two percentage points lower than the general market rate for traditional loans. Repayment generally starts from six to twelve months after a student leaves the college, it is not seen whether he/she has completed their degree program or not. There can be many repayment options for the student, which is commonly reduced to monthly repayment.
Types of College Loans available
There are different types of college loans available both for the students and their parents by the US federal government
Federal Perkins Loans: Specially offered to those who are is desperate need of money. Priority for these loans is first given to students that are getting Pell Grants. Repayment on a Perkins loan is made back to the college itself. The loan system for the year 2011 / 2012 is, loan maximums under this program are $5,500 per year for undergraduate students.
Stafford Loans: Are of two types namely subsidized and unsubsidized loans. The difference between these two is the timing before interest expense starts to accrue on this type of college loan.
As you know that the college loan is a very simple form of loan, specifically designed to support a student in completing his education. The federal government has designed special rate of interest and loan repayment procedure. The student also gets additional benefit in repayment structure and sometimes may even achieve extra time period or extension for the loan repayment. Therefore if you have planned to study in US and have applied for college loan do check twice in which college you will be studying and accordingly you will get placement after completing the course. Hence you not only need education but also a decent job to lead a decent life and repay the loan comfortably. So, go ahead and chase your dreams, because a good college loan can make even the impossible seem possible. All you need is determination and be responsible about repaying your loan timely.