Student Loans

STUDENT LOANS: AN INTRODUCTION

May 16th, 2008 | by vrao |

Student loans are offered to the students to help them financially for their higher or professional studies. They usually carry a low interest rate. On a broad basis there exist three kinds of loans: Loans granted by the government, loans made by banks and approved by the government, loans made by private organizations or lenders that carry no government guarantee. Colleges may also provide loans to the students, usually through partnership with the financial institutions.

Maximum interest rate at loans made by the government is fixed and hence more beneficial. One should give priority to the government loans. Parents of undergraduate students can also apply for federal loans called as PLUS i.e. Parental Loans for Undergraduate Students. Students opting for loans should always look for benefits and compare the interest rate banks offer. Maximum amount of loan a student or his/her parents can borrow is fixed in case of federal loans hence those who need to borrow more money then they have the option of borrowing loans from private banks.

The interest rate charged is usually more than that on federal loans and it also keeps on changing. Hence one should be more aware in case of these alternative loans. The interest rates vary from lender to lender hence here comes the task of comparing the interest rate of the private banks offering loans. In case of private loans one should be aware of all the costs associated with them and the also ways the interest will compound over time because the rates keep on changing in course of time in case of private loans.

There are federal loans like Stafford loans, Perkins loans, Family education loans, Ford direct student loans, Student loan consolidation and PLUS loans. You need to fill an application form to apply for loan; in case of applying for a federal loan you need to fill out Free Application for Federal Student Aid, or FAFSA. It is free and can be filled online. Once you are done with filling the form, you get to know your eligibility for federal student loans.