Education, beyond that offered by public school systems can be a bit expensive. As a result, most students might need some amount of external funding to further their higher education plans. Grants and scholarships may help cover a part of the expenses, but then that privilege is available only for a cream of students.

Not everybody qualifies for grants and scholarships. Student loans help to solve this incongruence by offering a level playing field for all the student classes. A variety of student loans exists both federal and private and for a prospective student, it is just about finding a scheme that best suits their requirements and expenses.

Student Loans, as mentioned already, are either federal or state funded, or those offered by private parties and non-profit private institutions. Starting with the former, the Federal Student Aid or FAFSA can be applied online, and the process is quite easy as well.

Another thing to consider is that the applicant must provide accurate and genuine information while filling out the application. Also, it is advisable to apply for Federal student aid as early as possible, after January 1st.

Another useful federal financial aid package is the Federal Parents Loan for Undergraduate Students or PLUS that considers the good credit ratings of the parents in exchange of financial help for their children.

These low interest loans cover everything from tuition fees and books to housing, library, and supplies. PLUS also can be applied online by filling out the necessary formalities.

Private student loans, on the other hand, are offered by private banks or other financial institutions, and do not have any federal government involvement in the entire process. This type of loans are issued for both undergraduate and graduate students and most avail them to cover the expenses that cannot be otherwise paid by federal aids.

But, unlike federal student loans, where the applicant can know before hand if they qualify for the loan, private student loans do not offer any prior hints and the final approval is solely based on the credit review of the applicant or applicants parents by the lender. If the credit rating of the applicant is not acceptable for the bank, they will reject the application then and there.

One more aspect about private student loans is that it is issued in a first come, first served basis, unlike the federal student loans that is given away on applicants needs. So, if you are planning to apply for a private student loan, start reasonably early.

The best place to look for private student loans is the web. There are many private banks out there offering student loan schemes, hence, it is advisable that a prospective applicant may perform some research and comparison game before choosing the one scheme that suits his her needs requirements fully.

Taking references from previous borrowers is also a good option. Finally, before submitting the application, make it a point to read the fine print thoroughly. This helps solve a lot of technical problems that could arise at a later stage.

When deciding upon a loan its important to understand the difference between types of interest rate repayments. There are two specific types of repayment options and its important to factor these into your final payment schedule.

Subsidized loans are loans which generally have some or all of the interest paid by someone other than the borrower. This type of loan is generally used whilst the student is still in school. Examples of this type of loan would include the Subsidized Stafford Loan and Perkins Loan.

Unsubsidized Loans are loans which accrue interest from the day that the loan is disbursed to the borrower (or their school). Although the loan may be completely deferred (Example: you dont make payments for a period of time) and you may not be currently making payments the interest will still be accruing on the loan amount. Examples of unsubsidized loans include the Unsubsidized Stafford Loan, Parent PLUS Loan, private alternative student loans, and student loan consolidations.

You will need to make the decision as to which repayment schedule you make at the disbursement point of the loan. I would always counsel that it is better to struggle and slowly pay off the loan interest rather than deferring all payments until graduation. Often graduates are forced into bankruptcy due to deferred student loans.

Ultimately, you have alot of research to complete before diving into the application stage. Do take your time and establish exactly what you are seeking as it makes it all the easier when dealing with the respective loan companies.

Hopefully your loan process will be as painless and easy as your studies shall be.

By: Steven Rowland

Loans are a type of financial aid that must be paid back. There are three types of student loans. Federal Loans given to students, federal loans given to parents and private loans.

The first type of loan is the loan given directly to students. They include Stafford loan, Federal Family Education Loans, Ford Direct Student Loans, and Federal student loan consolidation. These loans are directly available to the students and are available as subsidized or unsubsidized loans.

These loans should be paid after graduation. The grace period for both kinds of student loans is 6 months that means that a student has a time of six months after graduation during which he is exempted from paying anything.

If a student’s credit hours are less than half then his grace period is over and he has to start paying the loan. The main difference between subsidized and unsubsidized loans is that one is exempted from paying an interest on a subsidized loan until after the graduation.

The credit limit for undergrad freshman is 3500$ and it reaches the limit of 8500$ for graduate students. This limit increases to 12500$ per year for unsubsidized loans.

The second type of student loan is the loan given to parents. These are also known as PLUS loans. These loans have a much higher limit. This helps in meeting any gap in the education cost but the payments start immediately as there is no grace period. Parents are solely accountable for the payment of the loan. The interest rate on the PLUS loans is 8.5%.

The third type of student loan is the loan given by private banks and finance corporations. These loans have a limit higher than any federal loan. These companies provide the best financing terms and condition. Some companies even provide a grace period of twelve months. There are two types of private loans: direct to student/parents or through school channels.

The direct to consumer loans have a higher interest rate but are quick to process while the loans borrowed through school channels are slow to process but have a lower interest rate. The loan rate for private loans is higher than federal loans. The overhead charge depends upon the credit scores of a person.

One added advantage of private loans is that foreign students are also eligible for the loans but an American resident co-signer is also needed. They also charge a fee for the loan. If the credit score of a person is high then the fee charge can be omitted and the interest is also low. A statement of APR (Annual percentage Rate) contains all possible types of fees and it is provided when the loan is granted.

It should be used to compare the overall interest and fee when comparing the loans. Some federal and private student loans can be omitted if a student declares himself bankrupt and meets some conditions but these conditions are hard to meet.

Nowadays strict laws have permitted the loan companies to impose heavy fines on a bankrupt person. They are also punished in different ways like withholding of professional degrees or imposing heavy fines on them.

By: Luigi Castagna

If you are planning to further your education but do not have the money, why not apply for a Federal Stafford Loan.

Federal Stafford Loans are student loans by the government specifically the department of education. They offer low interest rates student loans for anyone applying to study in a US college or university.

There are also stafford student loans offered by the private banks and financial institutions. However, these stafford loans are offered through the federal family education program. So in a sense, the funds from the student loans are
Still from the government. They usually offer lower interest rates than federal stafford loans.

Some colleges and universities also have their own student loan programs. These schools are under the federal direct loan program. The government will disburse the funding directly to the school and then to you.

One disadvantages of choosing a school’s student loan program is that you do not have the choice of comparing different lenders and then picking which stafford student loan offer to take.

The interest rates and student loan amounts will differ from school to school so you may want to check with them before deciding.

There are also 2 types of federal stafford loans : unsubsidized and subsidized federal stafford loans.

As the name implies, unsubsidized federal stafford loan are given without the basis of their financial capacity. The interest rates will start once you start college or university. You are allowed to accumulate your interest and it will be added to the principal student loan.

On the other hand, subsidized federal stafford loans are given on the basis of their financial capacity. The student will not be charged interest rates while still schooling. The interest rates will be paid by the government. Not everyone qualifies for subsidized federal stafford loans. You may need to check with your school for the requirements.

By: Ricky Lim