Friday, May 1, 2009

Basics of Student Loan

Student loan can be obtained from two sources - The federal government and private lenders. To get federal student loans, you are required to file the Free Application for Federal Student Aid (FAFSA). There are three main categories of federal loans.

1. Student loan (Federal Stafford loan)
2. Parents loan (Federal PLUS Loan)
3. Federal Graduate PLUS Loan
4. Consolidation loan (Federal Consolidation Loan)


Federal Student loan is made in the name of the student and doesn't require a credit check. The repayment options are very flexible. Need to repay after the student graduates or leave schools or stop attending. Stafford loans are also directly offered by some schools. These are known as Direct Stafford loan.

Plus loan is made in the name of parent, where credit check of parent is required. However, the credit criteria for plus loan is different as compared to other loans. It's based on federal requirements. Here the repayment option is different than Student loan. In plus loan repayment starts after full the loan amount is fully disbursed. Some school offer parent loan through federal government and some through banks and private lenders.

Federal graduate plus loan is quite similar to plus loan. The only difference is that it's made in the name of a graduate student or a professional student. Here the repayment period is sort. You need to repay within 60 days after the loan mount is fully disbursed.

Consolidation loan is for the students who are still repaying their student loan or for parent who want to extend the repayment period of the Plus loan. You can consolidate all your student loans with Federal Consolidation loan. In consolidation your interest rate is fixed and can also lower you payment by extending repayment period.

If your education expenses are more than what you get in Federal student loan, you can go for private loans. Private loans are offer by banks and other lenders. Here you don't get the federal benefits.

3 comments:

alone said...

It's true that loan helps student like me to finish the study but I really hope that there's is loan with easy and flexible features.

Millionaire Acts said...

Nice to know a personal finance blog like yours. Visit mine too. I believe we have the same niche. :)

wooddash said...

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Alena

http://grantsforeducation.info