Educational Loans

By: EconomyWatch Content   Date: 23 November 2009

About The Author

EconomyWatch Content

Follow The Money

EconomyWatch, Content Team

 

  • Dot Div
  •      

The high costs associated with obtaining a graduate degree can make anyone feel intimidated. With the escalating supply of educational loans, it is possible for students to secure reliable, comprehensive financing options. This would help to cover diverse aspects of their academic life. However, repaying an education loan can be equally overwhelming as obtaining one. The vital factor is to review several educational loans before applying for one. 

Types of Educational Loans

Education loans can be broadly categorized into:

Federal Educational Loans

These loans have the most attractive repayment terms. Such loans are backed by the government, which sets up low interest rates for reducing the burden of debt on financially weak students. Nearly everyone qualifies for a federal education loan, which is not approved on the basis of the credit score or financial issues.

Other attractive features of a federal student loan are:

  • Payment grace period: Generally, monthly payments on a student loan becomes due as soon as a student completes his/her degree or course. However, federal student loan programs have a predetermined grace period after graduation, during which the student is exempted from making payments. This enables a student to collect sufficient funds and reorganize the payment plan more effectively. 

  • Loan forgiveness: Under a federal educational loan program, the students may qualify for complete exemption of loan repayment in certain special case. The federal government undertakes loan forgiveness to uplift community servicing professions or vocations, such as military, medicine and teaching. A federal student loan holder may also qualify for full loan forgiveness if s/he becomes permanently disabled.    

 

Private Educational Loans

These loans are offered by individual banks and colleges, and are more easily attainable than federal student loans. Such loans are generally preferred for undergraduate level studies. Private educational loans are typically issued on the basis of a student’s credit score. Students having a poor credit rating have to pay a higher interest rate on such loans. Private educational loans come with the provision of introducing a co-signer on the loan. This facility enables students to acquire lower interest rates and monthly installments.

Ideally, private educational loans must be kept as a last resort, after other financing options including federal student loans, scholarship and grants have been exhausted.


  • Dot Div
  •      

Most Popular in Student Loans

Related Links
blog comments powered by Disqus