Student Loan Types
A college student loan might appear unappealing to an undergraduate college student or their parents, but it could possibly turn out to be a smart investment for one’s future earning potential.
Though there are some types of student loans which are directly offered by a school or college as part of a financial aid package, the basic two types of loans are Federal Student Loans and Private student loans. All of which are sometime referred to as college tuition loans, and even Financial aid.
Federal loans are guaranteed by the United States government. These loans are low interest and do not have to be repaid until after one graduates, as long as the student remains enrolled in school as at least a half-time student status. Federal loans are not based on the borrower’s credit history or past record of ability to repay. When financial need is proven, issued through a SAR (Student Aid Report), Federal loans can be subsidized by the U.S. government, whereas the Government pays the interest to the actual lender while the student is enrolled in school (at least as half-time enrollment status). When financial aid need is not demonstrated, federal loans come unsubsidized and the student is responsible for paying the accrued interest while in school. The most common types of federal loans include Federal Stafford Loans, Federal Perkins Loan Program and the PLUS Loan (Parental Loan for Undergraduate Students).
Private student loans are credit based, and unsubsidized by the government. These loans are available through lending institutions, banks and commercial and private lenders. Each lender has their own set of criteria for approval and cosigners are most often required for those who do not have a good credit history. Quick student loans are the private kind and are able to be used for college living expenses, student travel loans and other school related expenses that come with college. These loans are also known and commonly referred to as alternative student loans and fast college loans. Most lenders defer repayment until after graduation with private student loans. It is always reccomended that potential private loan borrowers learn the basics of credit and loans while comparing the multitude of alternative college loans offered in the collegiate loan marketplace.
student-loans.net @ November 6, 2007