A student loans is typically a kind of loan designed specifically to assist students pay for college education and all the related fees, including tuition, publications and supplies, and even living expenses during the student’s stay at school. Normally, it is given as a repayment loan after graduation or following a grace period that can last as long as six months. Typically, any student who signs up for college must obtain a student loan. However, some students choose not to have student loans. There are other student loan options available, though, and these are discussed in more detail below.
If you do not have enough money to pay for college on your own, as a parent or guardian, you may be able to get a student loan for your child by requiring that co-signer have a certain amount of money saved up for them to cover college expenses. In this instance, your co-signer would be required to sign as a financial security for you, giving you permission to borrow the maximum amount allowed under your lender’s student loan program for your child’s educational needs. This co-signer benefit can be helpful for people who have less than perfect credit and are looking for student loan options that do not require them to start their finances on their own.
Another student loan option that may help pay for your education is called an educational loan consolidation. If you are experiencing financial difficulties, for example because of a divorce or loss of your job, you may qualify for consolidation of student loans. With this type of student loan, you are able to take out one payment per month instead of several, which can help to keep you on top of your finances. This student loan also has a lower interest rate than many other student loan options.
For most people, there are two main sources for student loans: either federal student loans or private student loans. Federal student loans are given through the United States government, which will distribute these funds to students based on need. In order to receive federal student loans, you must meet the government’s eligibility requirements. For most students, this means that you will need to be a full-time student at an accredited college or university. (Private student loans tend to be easier to obtain, but there may be some eligibility requirements that vary depending on the lender.)
Private student loans are given through private companies, often banks, that make private student loan payments to the student. Unlike federal loans, private loans do not need to be repaid until after the student has graduated and begun work in an employment that pays. The only benefit of federal loans is that if you defer your payments, you will lose eligibility to receive federal student loans later. As such, most private loans are granted with deferred payments for up to six months after graduation.
One private loan program that does not require a co-signer is the William D. Ford Federal Direct Loan, sometimes called a Direct Co-Signer Loan. This program awards students who do not have enough income or a good enough credit rating to qualify for regular student aid. In order to apply, the student must be a United States citizen and also must be a senior in high school.
With federal student loans, you usually have six months to begin repaying the loan, but the lender usually allows additional time, up to one year, to pay back the loan. This grace period gives students the opportunity to save up the money they need to pay off the loan, but interest usually continues to accrue throughout the grace period. If you graduate early, you may have a shorter grace period, but you will have to pay back the loan sooner. The repayment protections offered by the federal government make it easier to manage private student loans, but they are not without their drawbacks.
Because federal student loans are backed by the United States government, borrowers must meet strict requirements before becoming eligible for any of the many financial aid programs offered. First, they must meet the standard academic requirements required by the Department of Education. Second, they must maintain a minimum grade point average throughout their academic career, with a minimum GPA of at least 2.5. For subsidized and unsubsidized loans, borrowers must also complete an application for federal student aid, complete an application for a Social Security number, provide proof of parent or guardian income, and sign a master promissory note. Finally, all unsubsidized loans require that borrowers be enrolled in a college or university for at least three years in order to qualify.
