Student Loans

Overview

If you are planning to take a student loan, you should apply before applying to college. There are so many types of loans, from federal and state to personal student loans. The paperwork differs for each type of loan. Student loans must be paid back, however, many federal and state loans allow students to graduate and get a job before the repayment starts. This must be verified before signing on the dotted line because not all loans offer this convenience.

How It Works

Student loans are designed to help students pay their tuition fees, books, lodging, food, and other related expenses. In most cases, the loan amount directly goes to the college but in a few cases, it is handed over to the students. These loans help financially weak students fund their college education. Most of these loans come from the government, however, some 25 percent colleges and universities have become direct loan schools, offering student loans with their own funds. When applying for a student loan in the U.S., you need to fill a free application for financial aid.

Benefits

Student loans give many people opportunities they otherwise would not have had. You can get an education now and pay later. The repayment period is quite long too, sometimes even up to a year.

Cost/Pricing

Most student loans have low interest associated with them, and in most cases, the interest is not charged until repayment starts. Sometimes, there is a fee associated with applying for loans. Most often, you pay the fee against the money that is to be borrowed. Students can choose to pay the interest while still in college, however, only few students exercise this option.

Timing

Both subsidized and unsubsidized loans are guaranteed either directly or through guaranty agencies. Both types of loans offer a grace period of six months, which means that no payments are due until six months after graduation, or after the borrower becomes a less-than-half-time student without graduating.

Companies/Industries

The Federal and State Government offer student loans based on the same premise but the fine print of each may be different. There are other organizations, which offer student loans too, but, often it is the government that has the best repay options. Some of the companies (banks, credit unions or savings and loan companies) that offer student loans are Wachovia, Bank of America, Citibank, Fleet Bank, Key Bank, and PNC Bank.

Resources

• FAFSA
• StudentAid.com