About Student Loans

moneyStudent loans are a form of financial aid tailored to students who need financial assistance for college in supplementation to their institutional financial aid packages. The federal government, private lenders, and other financial institutions disburse student loans to help prospective students meet the financial requirements of attending college. Student loans provide financial leverage to students in terms of covering all their needs including tuition fees, study materials and living expenses, and can be a relief to parents with monetary limitations.

Types of Student Loans

There are two major types of student loans: federal and private. Federal loans are government- administered, and are disbursed directly from the U.S. Department of Education. Private loans are offered to students by banks and financial institutes such as Sallie Mae, Discover, and SunTrust. Federal student loans interest rates are usually lower than private student loans interest rates, and are generally fixed.  While there are two major types of student loans, there are also two main ways the loan funds are disbursed to students: loans can be either Direct to Consumer loans or School Channel Loans.

As the name implies, Direct to Consumer loan funds are given directly to the consumer. The borrower, in this case, can use the funds on academic needs as they see fit. On the other hand, the School Channel Loans are given to the borrower’s college or university, which then utilizes the funds for the student’s educational expenses.

Eligibility for Student Loans

Eligibility criteria vary from loan to loan, lender to lender, and program to program. As such, it’s difficult to keep track of all of the requirements, so be sure to be in touch with your school’s financial aid office as well as with your lender. As a baseline, any and all student loans will require the following criteria to approve you for a loan: you must have U.S citizenship or a co-signer who is a citizen, a valid Social Security Number (SSN), and a clean record, free of defaults or delinquencies in other loan programs, as well as felonies.

Student Loans Interest Rates

Most federal student loans interest rates will be minimal, but their stringent policies can make it difficult to repay them. On the other hand, private student loans interest rates may be slightly higher, but these student loan repayments are made easy by no prepay penalties and more flexible terms and conditions.

 

Miscellaneous Student Loan Topics