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Thursday February 27th 2020

Student Finances – Student Loan Options

There are three main types of student loans anyone can go for, those are federal student loans, most known is the Stafford loan, then there is the parent loan and also private student loans.

student loan optionsMost students go for federal government loans like Stafford and Perkins loan as they have very low interest rates and you don’t have to go through a credit check or offer collateral. If you want to apply for a federal government student loan you can fill in the online application at FAFSA government website.

The most known and most used type of federal government loan is Stafford loan and it comes in two main variations, FFELP or Federal Family Education Loan program which is provided by private lenders and FDSLP or Federal Direct Student Loan Program which is provided by the US government.

They are broken down into subsidized and unsubsidized loans. A subsidized loan is when the government pays the interest while you are in school and unsubsidized are the ones where you pay all the interest, but you can postpone paying the interest after you graduate. The subsidized loan can only be acquired by those who can clearly demonstrate the financial need.

The repayment of the loan usually begins 6 months after graduation. The standard term for loan repayment is 10 years, but there are different ways of loan consolidation you can qualify for. The loan rate is fixed at 6.8%.

Parent loans are the responsibility of the student’s parents, so the student has nothing to do with the loan. So when student takes the responsibility of paying the loan and fails to make the payment the parents will be responsible. Parent loans usually have a fixed interest rate at 7.9%. The repayment of the loan begins 60 days after full disbursement of the funds and the term is like with Stafford loans, up to 10 years.

Private Student loans are used to make the ends meet, to pay for the gap that government aid leaves you with of paying the entire education. Students can get private loans from private lenders such as banks or lending companies, but unlike federal government loans, private loans depend on your credit score.

Private student loans are more expensive in the long run than federal government loans. The rate of private student loans can vary, and is rarely a fixed rate, so it is better to first exhaust all of your federal options before considering a private student loan as an option.

These are the three basic types of student loans and the most commonly used student funding options. Remember that there are other funding options available, so be sure to investigate every possibility before you sign anything.

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