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.