Need Money For Your College? Get an Education Loan
Education stands between poverty and prosperity and it opens doors of opportunities. Money paid for education is the best investment anyone can ever make. Availability of the education loan, at the appropriate time, can make your dreams come true.
If you need to borrow for higher education, there are two types of education loans: federal and private. Federal education loans – including Stafford Loan for students, PLUS for parents, and Graduate PLUS – offer fixed interest rates and terms determined by the federal government. Some colleges and universities participate in the Federal Direct Lending program, meaning students and parents may borrow a federal education loan directly through their financial aid office. Schools that do not participate in the Federal Direct Lending program may provide a list of other lenders that offer federal education loans. Private education loans are offered through many lenders, and interest rates, terms, and benefits vary.
Most education loans permit the borrower to use the loan funds to pay for any expenses in the official cost of attendance. The cost of attendance, sometimes called the student budget, includes tuition and fees, required books and supplies, room and board (for students enrolled at least half time) and transportation and personal expenses. Some private student loans may limit the loan to institutional charges especially if the borrower has marginal credit.
The loan may also have annual and aggregate loan limits. The annual loan limit is the maximum amount you can borrow per year. The aggregate loan limit is the maximum amount you can borrow in total. In some cases the aggregate limit applies to just the individual loan program while in other cases the aggregate limit applies to all education debt.
Education loans typically specify three time periods: the in-school period, the grace period and the repayment period. Most loans do not require the borrower to begin making payments while they are still in school. Some loans provide for a 6 or 9 month grace period after graduation during which the borrower is not required to begin making payments. During the repayment period, however, the borrower must make monthly payments of principal and interest or they will be considered delinquent or in default.
Certain federal student loans are subsidized, which means that the federal government pays the interest during the in-school period and grace period. These include the Perkins loan, which has a 9 month grace period, and the subsidized Stafford loan, which has a 6 month grace period. These loans are need-based.
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