Higher Education Student Loan

By: EconomyWatch Content   Date: 25 November 2009

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A higher education student loan can be availed from both Federal government and private lending organizations at low interest rates. The federal government allots more than $60 billion for student loans each year and is committed to help students who want to pursue higher education. Private lenders also offer higher education student loans at competitive rates.

Higher Education Student Loan Options

Perkins, PLUS and Stafford loans are available for students.

Perkins Higher Education Student Loan:The federal government offers Perkins loans through the schools students attend. Both fulltime and part-time graduate students avail this loan and it is repaid to the school directly. A student can avail up to $6000 per year through the Perkins loan and the interest rate is 5%. This is a need-based program, meaning only needy students will get the loan. Students who received a Pell Grant are likely to be offered the Perkins Loan.

PLUS Student Loans: Plus Student Loans or Graduate PLUS Loans are meant for students who require additional financial aid. However, this loan is only available for students who pass a credit check. While the Direct PLUS loans have a 7.9% locked interest rate, FFEL (Federal Family Education Loan) PLUS loans have an 8.5% fixed interest rate.

Graduate Stafford Loans:The Stafford higher education student loans offer up to $18,500 per year. One need not demonstrate financial need to qualify for this loan. The interest rate is fixed at 6.8%. The government will pay interest for up to $8500 of the loan amount when you are in the graduate school. The government also pays the interest when you defer the loan and for six months following the completion of the graduate program.

Private Higher Education Student Loan

Private higher education student loans fill the gap between the true cost of graduate education and Federal aid. More often, Federal aid and loans are not enough for students to cover the cost of education. Higher education loans from private lending organizations work in the same way as unsecured loans. However, banks charge lower interest rates on educational loans as compared to unsecured personal loans. Usually one requires holding an account with the banks. Most banks require a credit worthy co-signor for educational loans.


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