Student loans are financial aids taken for the purpose of education. They have to be repaid with interest once graduation is completed, and the repayment schedule begins from six months after graduation. Loans are disbursed to either students or their guardians by the federal government, banks, private moneylenders or the school itself. Most loans have 10-year repayment periods and their rates of interest change on the 1st of July every year.
There are different types of loans available to the students – Stafford loans, Perkins loans, PLUS loans and private educational loans.
Stafford loans are disbursed by the federal government. To be eligible, the student must be enrolled in an accredited educational institution at least half-time. The student begins repayment after completing graduation. Stafford loans may be subsidized or unsubsidized. In a subsidized loan, the interest is charged only when the student begins repayment; but in an unsubsidized loan, the interest begins from the day the loan is disbursed. Commencing from July 1, 2005, the rate of interest on a Stafford loan is 5.30% for the repayment period and 4.70% for the grace period.
Perkins loans are disbursed by the school rather than the federal government. Again, a student must be enrolled in an accredited education institution at least half-time to be eligible for it. A Perkins loan charges lower interest rates than a Stafford loan, about 5%.
PLUS loans are loans taken by the parents for their children’s educational needs, if the children are dependent. The student must be enrolled in an accredited educational institution at least half-time to be eligible. Parents are responsible for the repayment of PLUS loans. A Perkins loan is a low interest loan, charging rates of interest from 4.17% (it may go up to 6.10%, depending on the period of repayment).
Private loans are given by banks and private moneylenders. They charge a high rate of interest and there is less flexibility in their repayment methods. The rates of interest differ from one lender to another.
Students can take different types of loans for their education at the same time. Several loans can be consolidated into a single loan with a single repayment plan to avoid confusion. These consolidated loans also help in reduction of interest rates.
In the United States of America, at least 66% of the undergraduate students are using some kind of student loan to complete their educations. In the year 2003-2004, undergraduate students borrowed $19,202 per annum on an average in Stafford and Perkins loans. The average came to $23,814 if PLUS loans are also taken into account. The average figures for graduate students were even higher. Every year there is an estimated 3% increase in the amount of average loans taken.
Related Articles of Interest :
-
Federal Student Loan Refinancing
10 August 2010 8:30 PM |
No Comments
Federal Student Loan Consolidation is a financing facility that allows a borrower to merge his several federal student loans into a single new loan, and thereby bring them under one repayment plan. Federal student loans are generally issued or guaranteed by the United States government...
-
A Guide To Federal Student Loan Consolidation
10 August 2010 8:30 PM |
No Comments
Federal Student Loan Consolidation is a financing facility that allows a borrower to merge his several federal student loans into a single new loan, and thereby bring them under one repayment plan. Federal student loans are generally issued or guaranteed by the United States government...
-
Private Student Loan Consolidation
10 August 2010 8:30 PM |
No Comments
Private student loan consolidation is one of the debt repayment tools that saves the time and money of borrowers. Private student loans, also known as alternative student loans and personal student loans are credit-based loans offered by private lenders to meet student educational expenses. Private...
-
Private Student Loan Refinancing
10 August 2010 8:30 PM |
No Comments
Private student loan consolidation is one of the debt repayment tools that saves the time and money of borrowers. Private student loans, also known as alternative student loans and personal student loans are credit-based loans offered by private lenders to meet student educational expenses. Private...
-
All About: Student Loan Debt Consolidation
10 August 2010 8:30 PM |
No Comments
Student loan debt consolidation is a strategy that allows a student to combine all his loan debts into a single loan, with one monthly payment. Student loans are classified into federal student loans and private student loans. Federal student loans are issued by the US...
-
Student Loan Consolidation
10 August 2010 8:30 PM |
No Comments
Student Loan Consolidation serves as a debt repayment tool that saves time and money for students. At present, most of the students in the US borrow money to meet their educational expenses, and students often leave college with large debts. A range of loans, including...
-
Student Loan Refinancing
10 August 2010 8:30 PM |
No Comments
Student Loan Consolidation serves as a debt repayment tool that saves time and money for students. At present, most of the students in the US borrow money to meet their educational expenses, and students often leave college with large debts. A range of loans, including...
-
Federal Student Loan Consolidation
10 August 2010 8:30 PM |
No Comments
Federal student loan consolidation is a financing program that allows borrowers of federal student loans to merge several loans into a single loan. For all practical purposes, a consolidated loan behaves like a new loan. It reduces the borrower’s monthly payment up to 60%. Other...
-
A Guide To Student Loan Debt Consolidation
10 August 2010 8:30 PM |
No Comments
A student has the option to combine several federal loans into a single loan. This is called as consolidation of the loans. Consolidated loans have lower interest rates and higher repayment periods. There are several finance organizations and banks that come forward to consolidate existing...
-
Average Student Loan Debt
10 August 2010 8:30 PM |
No Comments
The average student loan debt depends on the institution and the course which the student is studying. The National Post-Secondary Student Aid Study has calculated the following statistics for average student loans for the academic year 2003-2004. Twenty-one percent of the students attending certificate courses...