The Student Loan

The student loan is a money lending system that allows college students to pay for their tuition, books, and other expenses that are pertinent in acquiring tertiary education. The student loan is quite different from the usual money lending system in a sense that the interest rate is significantly lowered and the student doesn’t have to pay for it yet while he or she is still studying.

The student loan is an important component in many college education systems. In theory, it allows students who have no financial capability to study in college so that they can pay the debt later after they have graduated and they already have a stable source of income. This is especially true today because of the high college tuition rates as well as the expensive cost of living associated with it. With the student loan, those who are in college can pay for their miscellaneous fees, lodging, food, extracurricular activities, and other school-related stuff that requires financing.

However, not all people are qualified for the student loan. In order to be granted one, some eligibility factors are considered such as income level, parents’ income level, socioeconomic status, and so on. Of course, students who have the capacity to pay the tuition should not avail the student loan since there are more deserving people who needs the money.

There are basically two types of student loans: the student loan that is sponsored by the government and the private student loan. While the former is funded by the taxpayer’s money, the latter on the other hand are sponsored by private institutions. The interest rate of the loan is usually around 2% lower than the current market rate for traditional loans. The student must also pay the loan generally 6-12 months after they leave the school, regardless of whether they have graduated from their degree or not.

Because of the so many choice of lenders where students can borrow money for their education, it is highly advised that those who are planning to must assess the institution where they will get the student loan. Studying the payment scheme of the loan is recommended so that you won’t find yourself in such a tight situation by the time you start earning your income after graduating on college.

Availing A Student Loan Relief

Because of the high costs of college education nowadays, a student can easily accumulate up to a hundred of thousands of dollars of debt through student loans; if you find yourself in a situation after graduating college wherein you are unable to pay these loans, you can always avail of the student loan relief. However, not all people are eligible for a student loan relief. You have to qualify the conditions and qualifications to have your loans forgiven or forgotten. Here are some of them.

The easiest way to get a student loan relief is by entering the public service profession. This includes a lot of jobs such as major volunteer work like the Peace Corp or Americorps, military service, teaching, public child service agencies, and practicing medicine. These types of professions will make you eligible for partial or entire student loan relief but you must remain in that position for at least 10 years and work diligently.

Another situation where in you can get a student loan relief is when the college you attended did not meet the universal requirements that the government requires of schools. However, this doesn’t mean that you are qualified for a student loan relief because you are dissatisfied with the quality of instruction that was given to you. You can only avail of this type of student loan relief if your school closed while you are enrolled or within 90 days of your withdrawal from classes, if you or your school were falsely certified, or if your identity was stolen by someone else to acquire student loans.

An unfortunate circumstance that will also make you eligible for a student loan relief is when you become permanently disabled. This situation will make it hard for you to earn income which in turn will significantly affect your ability to pay your debt. You need some proper documentation about your disability to make the process of applying for student loan relief easier this way.

There are also a couple of measures that will make it easier for you to acquire student loan relief, if you plan on availing it. Saving your pay slips, keeping in touch with your lender, and documenting your compliance with student loan relief qualifications annually are great way to improve your chances that your debt will be forgiven.

Basics of Government Student Loans

The most common type of student loans that you can avail for your college education are government student loans. These loans have very low interest rates as the purpose of these is not to gain profit but rather to help citizens who are financially incapable to get higher education. You can use these loans to finance your tuition, books and college supplies, lodging, food, and other expenses that you may need while studying. Government student loans can be paid after graduation, after a period of about 6 months wherein ideally the individual already has a stable source of income.

Government student loans are different from private student loans because they are usually subsidized by the government. Because of this, you don’t have to pay the interest while you are still studying as the government will shoulder it for you. They have also very flexible terms so you won’t be put in a tight spot paying for them after you have just gotten your first job from graduation. However, they can only be availed on schools that participate in government aid programs.

In addition to that, government student loans doesn’t usually look at your credit rating for you to qualify a student loan, unlike private student loans. But you have to meet certain qualifications for socioeconomic status and the income of you and your parents. This is because government student loans are specially created for people who do not have the ability to pay their college expenses. Another limitation of government student loans is that it has a lower cap limit than private student loans. So if you are eligible for government student loans, it is best that you avail of it first before acquiring private student loans.

In the United States, there are several types of government student loans that you can avail of. These include Stafford Loans, Perkins Loans, PLUS Loans, and the Federal Consolidation Loan. You can also borrow directly from the Department of Education through the Federal Family Education Loan Program or FFELP. To avail of government student loans, you must first complete the Free Application for Federal Student Aid or FAFSA so that you can be deliberated for federal aid.

Understanding Subsidized Student Loans

There are two main types of student loans that you can avail while you are in college, the subsidized student loans and the unsubsidized student loans. While it is most likely that you will end up with the both of them at the end after you graduate, it is useful to know the difference between the two due to the payment schemes that are incorporated within them. That being said, the main difference between subsidized student loans and unsubsidized student loans is how the interest accumulates. In short, the government or the school subsidizes the interest while you are still studying.

The main characteristics of subsidized student loans is that they have a low, fixed interest rate, you don’t have to pay for it while you are still studying or even when in deferment, and there is no interest while you are still at school or in deferment. Also, the qualification for it is not based on your credit rating but rather on your financial standing. You have to pay your loans and interest after your grace period of around 6 months after graduation or leaving school.

On the other hand the unsubsidized student loans, like subsidized student loans, allows you to pay the principal of the loan after the grace period. But you do however have to pay the interest of the loan even when you are still studying since it is not subsidized by the government or the school. It is also based on the credit rating of the lender so those who have excellent credit history will avail a lower interest rate and smaller loan origination fee.

Another major difference between a subsidized student loans and unsubsidized student loans is the amount of money that you are allowed to borrow per year. Subsidized student loans are more strict and have a tight cap on the maximum amount. Meanwhile, unsubsidized student loans also has a cap but it is quite higher than its subsidized counterpart, at around $5,000 more per year.

Some of the most common subsidized student loans in the United States is the Subsidized Stafford Loan and the Perkins Loan. Because of their difference, it is advisable that you only get unsubsidized student loans after reaching the cap on the subsidized student loans.

Are You Qualified To Get Student Loans?

Reputable colleges or universities require very high tuition fees but not everyone can afford to pay. If you are planning of going to college or already in college but does not have a good financial status, it’s best if you look at student loans and take that into consideration. There are many private lenders and companies who offer student loans to eligible applicants. But how would you know if you are qualified to get student loans? Here are the factors that might affect your eligibility.

First, have the courage to apply for a student loan. In fact every student in need should apply for financial aid and get student loans. Most people think they will not qualify because of this-and-that reasons but what they didn’t know is that there are a number of factors involved in the qualification process and there is always a possibility for a student to qualify.

Second, you must be aware that there is a government aid program like the Federal Student Aid (FAFSA) that provides loans to students who are in need of financial support. If you apply for eligibility in this program and you get qualified, this will open a lot of doors for you to be able to get student loans. Meaning it will help determine the applicants eligibility for student aid programs in many private grant and scholarship programs.

Third, make sure to check out scholarship programs before applying for a student loan. It’s better if you can pick up one of them because there will be no need to get a student loan. You have to double check your status with other loans in case you have an existing loan to avoid future nuisance in terms of your qualification.

Lastly, be sure to study well to show consistent good performance in your record. This is a very strong point going in your favor. You must have a clean criminal record and there should be nothing to put the authorities in doubt.

Evidently, to get student loans is easily accessible. Anyway, the government is always there to make sure that the process is simple and smooth for everyone’s convenience.