Student loans are designed to enable education for those who want to learn but don't have enough money. It's no secret that college fees cost a lot of money. And not all families manage to collect such sums. Therefore, student loans are a great way to get an education and not go broke.
The key feature of student loans is that the interest rate is usually lower than other loans, and the repayment schedule is more flexible.
Student loans are of two types: federal and private. The difference is that the federal ones are provided by the government and private, respectively, by private lenders. Federal student loans often have lower interest rates than private loans.
There are several requirements to qualify for a federal student loan:
- Students who are enrolled at least part-time at the school. Schools must participate in the Federal Direct Loan Program.
- Academic progress must be at least satisfactory.
- You must have a diploma or equivalent diploma.
- You must have a valid social security number.
- U.S. citizenship or eligible non-citizenship.
- You must not have a problem with any loan payment for a previous loan.
You need the file Free Application for Federal Student Aid to get a federal student loan.
Private student loans are usually both more complex and more accessible at the same time. To get a private loan, you need to be prepared for a thorough check of your ability to pay. At the same time, private lenders often do not put forward any special requirements for education or diplomas.
There are two types of student loan interest rates: fixable interest rates and variable interest rates. But only federal student loans always have fixable interest rates.
Federal student loans interest rates:
Undergraduate - 4.99%
Graduate - 6.54%
Parent PLUS or Grad PLUS - 7.54%
Private student loans interest rates:
Fixed - 3.34% to 14.99%
Variable - 1.04% to 11.99%
Student loans can be used to cover various types of expenses. For example, you can pay for tuition and fees, housing, meals, transportation, and buy any study materials you need.