What are Student or Education Loans?
What are Student or Education Loans?
Education Loans can be of three types: Student Loans (i.e. Stafford and Perkins loans), Parent Loans (e.g. PLUS loans), and Private Student Loans. There is also a Consolidation Loan, which allows the borrower to combine all of their loans into one loan so as to simplify the payment. Federal Education Loans are available in the form of direct loan or federally guaranteed student loan programs.
Student Loans are a specialized loan type that can be accessed only by students or their parents. Their purpose is to assist a student in paying the costs of professional education. Student loans are educational loans which are a form of financial aid that must be repaid, with interest.
Federal Student Loans are available to College and University Students under the form of funds given directly to the school in order to enhance personal and family resources, scolarships, grants and work-study. They may or may not be subsidized by the U.S. Government, depending on the student’s financial need. These loans may be used for paying for educational expense at the school that granted your loan. School charges such as tuition, room and board, books supplies, transportation etc. are included in the educational expenses. Almost all students are eligible to receive Federal Loans, regardless of their credit score. Both types of loans offer a ‘grace period’ of six months, meaning that no payments are due until six months after graduation.
Private Student Loans, on the other hand, are not guaranteed by the government and they are offers made to students by banks or finance companies. They offer higher loan limits than Federal Loans and a grace period with no payments due until after the graduation. They normally hold higher interest rates, multiple fees and lack borrower protection.
