Student Loan Information

Higher education loans differ from grants and scholarships. A student loan must be repaid by the student after the completion of their studies, while grants and scholarships do not have to be repaid. Normally a student loan can be in the form of a federal loan given to a student or as a private loan that is given to students and parents of the student.
Federal student loans are made directly to students. They are given to complement the student’s personal and family resources. A federal student loan may be subsidized or unsubsidized depending on the financial need of students. Both subsidized and unsubsidized loans are guaranteed by the U.S. departments of education, either directly or through guarantee agencies. Almost all students are eligible for federal loans for students who have grace period of six months. Subsidized federal student loans are given to students who have to prove their financial need for loans. While not in a subsidized student loan, the government does not pay the amount of interest on the loan. The interest is allowed to accumulate during college and the student must pay after completion of studies.

Parents have the option to borrow money to cover educational expenses of higher education. This type of loan is called Parent Loan for Undergraduate Students. In this type of loan grace period has not offered and payments begin as soon as the loan is disbursed.

Private Student Loan is that extends loan by banks and other financial institutions directly to the student. A private Student Loan has a grace period of six months and payments must be made after completion of studies. There are occasions when the grace period extends until 12 months and this is subject to approval by the lending authority. Most private loan programs are linked to one or more financial indices, as the Wall Street Journal Prime Rate or the BBA LIBOR plus an overhead charge. This type of loan is always a time of origination of a fee that depends on the loan amount.