Getting Student Education Loans

For a student to survive this modern age of industrial demand, he must find a student education loan that would help in bridging the educational level residency. However, the cost of education has become highly prohibitive. If the parents didn’t save enough for the college education of their children, students will have no choice but to obtain loans to finance their studies.

The process of obtaining a student education loan may seem to be a quagmire for any student that has not been in any type of loan yet, so it is advisable to familiarize with these types of loan agreements before engaging in any. Their parents are in best position to help them out with the loan because more often, the lending company will require the parents to co-sign the loan before even processing their application.

Generally, a student education loan is an unsecured loan available to students at a very low interest rate compared to unsecured loans in the market. This is actually a special feature of the student education loan for the purpose of having more students take the initiative to take up higher study. Further, this is a provision made for students to support them to avoid feeling burdened with large expenses of education as well as their parents. The student becomes the borrower and payer (the parents included if they co-sign the loan) of the incurred cost of his education. The borrower will start repaying for his loan once he completes his course of study and gets employed. In cases such as not completing the course study, the lender provides a leeway for the student that may defer significantly in the loan payment.

The student education loan covers all expenses incurred during the course of study of the student, which includes boarding and lodging, purchase of computer, study materials, laboratory expenses, and other educational course fees.

Another benefit is that students with bad credit history can even still avail of it to pursue further education although interest rates are slightly higher but are still affordable than other bad credit loans in the market. Obtaining quality education is one of the most important requirements everyone should have. It may require money to achieve it but there are several kinds of support that the government provides. With this, students can now take up more educational opportunities, thus reducing burden for both students and parents.

The Secret To US Department of Education Loans

If you have heard about any kind of Federal financial aid for students, you are already familiar with US Department of Education loans. The US Department of Education handles all government aid for defraying the cost of attending college in America, from grants to loans. The first thing that you will need to do to apply for US Department of Education loans is to fill out a FAFSA, or Free Application for Federal Student Aid form. FAFSA forms compare the amount of money required to attend a specific college to the amount of money that can be expected to be paid by the family of the attendee. Any difference is the amount of money eligible for student aid.

Qualifying for US Department of Education Loans
US Department of Education loans have specific qualifications that an applicant must meet to be eligible. The qualifications include US Citizenship (some non-citizens with social security numbers are also eligible), financial need, possession of a valid Social Security Number, and proof of eligibility for higher education in the form of a high school diploma, General Education Development (GED) certificate, or similar. Furthermore, applicants for US Department of Education loans must be in good financial, academic, and legal standing. In other words, they must be registered with the Selective Service if required, they must not have defaulted on a student loan in the past, they can have no record of conviction on charges of sales or possession of drugs, and they must maintain a certain grade point average (GPA) to continue to receive student loans from the Department of Education.

Types of US Department of Education Loans
There are three main possibilities when considering US Department of Education loans: grants, which are monetary gifts, student loans, and work-study programs where the money for education is earned. Only in the case of student loans
does the money need to be repaid. Most federal grants are based solely on financial need, and some are given on a first-come-first-served basis, so it is important to apply as early as possible.

Work-Study programs are not technically US Department of Education loans, but they are a federally mandated way to
receive financial aid to attend college. A number of work-study hours are specified as part of the financial aid package.

These usually involve jobs working with non-profit companies or on campus, and pay a modest salary. The money earned can be used for college tuition. True US Department of Education loans include the Perkins Loan, the Stafford Loan, and the PLUS loan for parents.

Perkins loans have a particularly low interest rate and can be paid back over a time period of as long as 10 years. There are a limited number of Perkins Loans available to each school every year. The Stafford Loan has a higher interest rate than the Perkins loan, and doesn’t necessarily offer a grace period after graduation. However, there are more Stafford loans offered by the US Department of Education every year. Stafford loans are even available to students who don’t have a pressing financial need. Stafford loans may be paid off over a period of as long as thirty years.

PLUS loans are the final type of US Department of Education loans. They are offered to parents of undergraduates, as opposed to the students themselves. Payments on Federal PLUS loans start two months after the money is received, and can be paid off over a ten-year term.

Private Education Loans Should Be Carefully Compared Before Borrowing

For many families, borrowing is one of the key components of financing a college education. To that end, a family may utilize one of the many education loan options that are available, such as private education loan programs available from lenders.When a family borrows an education loan, they essentially rely on future income sources to pay college costs, as they will be repaying the education loan back in the future. Since loans need to be paid back, the loan repayment will be an added responsibility in the future and one that needs to be taken very seriously. Loans are not free and actually can be very expensive. It is imperative that if you do borrow a private education loan that you be a smart borrower, as decisions that you make now will impact your life style and options in the future. Students should first maximize loan borrowing through the Federal Direct Stafford Loan Programs, if eligible, which have favorable terms, various repayment options, and typically are the lowest cost loans.

Private education loans, also referred to as alternative loans, are credit based loans offered by lenders, including banks, credit unions, state agencies, and private companies. It is important to understand the role of credit in the private loan process, as private loans are not automatic financing options. Private loan programs use a borrower’s and co-borrower’s (if applicable) credit worthiness as a determinant when considering applicants for private loan eligibility. A borrower’s credit worthiness not only determines if they are approved for the loan, but has a bearing on the interest rate assigned to the loan. Ultimately, when talking about private loans, your credit rating is a very important contributing factor in the private loan review process.

Although specific lender underwriting guidelines are proprietary information and unpublished to the consumer, it is known that the strength of the applicant’s credit is a large factor. With that said, it is a worthwhile exercise to review your personal credit standing regardless, as establishing and maintaining good credit is vital for many reasons. In general, credit is the basis of most consumer borrowing, thus being proactive with credit is a positive practice.

Before borrowing a private education loan, you should carefully compare the terms, repayment details, and total cost of the loan, including interest rate and fees. Loan terms and repayment details vary greatly among lenders and between loan programs, so do be sure to compare loan details carefully and ask the lender many questions when reviewing loan programs. Important information to inquire about includes whether the rate is fixed or variable, if the loan incurs any fees, if there is a prepayment penalty, what the length of the repayment term is, and if there are any deferment or forbearance provisions available. Loan applicants will be provided with a disclosure notice with the financing details of the loan which provides a good opportunity for the borrower to review the minute details of the loan prior to committing. Just be sure to ask many questions and compare several loan programs before committing to a specific. Check out the website Financial Aid Sense for a complete guide on how to compare private loan programs.