Bank Student Loan

By: EconomyWatch Content   Date: 7 December 2009

About The Author

EconomyWatch Content

Follow The Money

EconomyWatch, Content Team

 

  • Dot Div
  •      

A scholarship or grant is always the first option of students who want to finance their college education. In the absence of such resources, a student often applies for a bank student loan. A student loan, though a debt obligation, has flexible terms and lower interest rates in comparison to other lines of credit, such as a personal loan or a student credit card. Additionally, a bank student loan helps to cover several education-related expenses. 

Bank Student Loan: Coverage

In most cases, the education loans proceeds are disbursed to the college authorities for distribution. In such cases, an educational institution will primarily ensure that the tuition of the college is covered.

Whether a private or a federal student loan, the priority costs to be paid from the loan proceeds are:

  • Tuition and other school fees

  • Books and other essential supplies

  • Other related expenses, including dorm charges and activity fees 

Once these costs are covered, the residual bank student loan proceeds may be used for paying anything, according to the borrowers’ discretion. 

Generally, the remaining proceeds are issued to the students by the educational institution’s financial aid office. 

Students typically use the balance for:

  • Rent or mortgage

  • Food costs

  • Utilities

  • Transportation expenses

Bank Student Loan: Special Covers

A student applying for a bank student loan to pursue studies abroad is generally offered different forms of insurance cover by the lender:

Health cover- A medical emergency is a tough situation for students living independently, particularly when staying in a foreign country. A health cover ensures that a student is taken care of during such emergencies, eliminating the burden of accumulating funds during such difficulties.

Content cover - When staying in an unrestricted accommodation, such as a hostel, the risk of theft and loss are great. A content cover enables to ensure that if important articles are lost, stolen or even damaged by a natural calamity, the student does not suffer.

Domestic travel cover - Traveling home is a regular event for a student studying abroad. That is why travel cover is crucial, as it encompasses accidents, baggage loss and other unexpected events that may hinder a trip.

A student has to pay an additional amount to the bank student loan lender to avail the benefits of such covers, which is generally not included in the loan amount, and is paid separately.


  • Dot Div
  •      

Most Popular in Student Loans

Related Links
blog comments powered by Disqus