Student College Loan

By: EconomyWatch Content   Date: 25 November 2009

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A student requires financial assistant to attend college. Although grants and scholarships are available to students, many do not qualify for them. A student college loan is the only option for most students. Fortunately, there are many types of loans available so that a student can opt for one based on individual requirements. The most common types of loans are discussed here. 

Student College Loan - Stafford Loans

Stafford loans are need-based loans, meaning that the applicant should show the need for such a loan. A student can receive this loan directly from the government, or through banks and credit unions. There are three types of Stafford loans available, namely subsidized Stafford loans, unsubsidized Stafford loans and additional unsubsidized Stafford loans.

Subsidized Stafford Loans: These student college loans are need-based, and come at very low interest rates with long repayment tenures. The government pays the interest for the loan when the student is in college or in deferment or during the grace period.

Unsubsidized Stafford Loans: These are not need-based loans, but come with low interest rates and long repayment schedules. These loans suit people who are not eligible for subsidized Stafford loans because of their lower need levels. It is also suitable for people who wish to supplement their existing student college loans.

Additional Unsubsidized Stafford Loans: This is a federal government loan meant for independent students. 

Student College Loan - Perkins Loans

These loans are meant for people who have extreme financial needs. These loans have very low interest rates. Interest charges are not accumulated until nine months after the student graduates. Timely payment is good for these loans, since these loans are entered in credit reports. 

Student College Loan - Private loans

Usually, federal student college loans do not cover the cost of education completely. Most students opt for private loans to complement existing loans. The interest rates of private loans are higher than those of federal loans. Although some private loans come at lower interest rates, the applicants should have strong credit scores to take advantage of them. The interest rates of private loans typically depend upon the creditworthiness of the applicants and market conditions.


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