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Sunday, August 20, 2017

 

Student Loans Explained

Understanding the different types of student loans


 
The rising costs of college tuition have made it a virtual necessity for college students to apply for student loans these days. Not only do they have tuition costs, but the cost of books, meals, gas, cell phones, recreation, etc. Whether you're planning to enroll in business school or culinary college the likelihood that you will need to consume student loans at some point is escalating rapidly.

The variety of available student loans enables students to take care of their enormous college expenses. A student loan however must be repaid under specified circumstances.

Here is a rundown of student loans with differing conditions and time frames for repayment:

  • Direct Student Loan have a schedule of repayment that begins 6 to 9 months after the student has completed college. Direct Student Loans are distributed through the school the student is attending, which enables the interest rates to be much lower than a Guaranteed Student Loan.
     
  • Guaranteed Student Loans (also known as Stafford Loans) have a low interest rate. A student can apply for a subsidized or unsubsidized student loan. A subsidized loan means the government pays the interest for you while you are in school.

    The subsidized student loan is based on the students financial need. An unsubsidized student loan means you will be charged interest while you are attending school. The principal must start being paid after you have finished school.

    Both types of student loans need to start repayment six months after the student has finished college.
     
  • Federal Parent Loans or PLUS Loans as they are known is a student loan not contingent on your income, but lenders do consider personal credit history. Parents or guardians who have a dependent child enrolled in college at least part-time are eligible for the PLUS loan. The interest rate is 9% or less.

    Virtually any school or program will allow you to utilize the Direct Student loan, Guaranteed Student loan or PLUS loan. It is very important to thoroughly research all available options for funding long-term education. Your future is tied to your funding, which is your student loan.

About the Author:

John Williams is a student loan blogger who reviews student loans and interprets often complicated financial data into easy to understand language.


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