Student loan is one of the most popular categories of loan options today, as the cost of education is rising by the day and there are several students who cannot afford the education fee without the aid of these loans. College expenses are seldom within everyone’s budget, and most students find it difficult to pay the tuition fee and the additional expenses related to further education without the aid of a student loan. This article intends to provide an overview regarding the importance of student loans, types of student loans available, selection of the right loan type etc.

Student Loan – Importance

There is no denying that education is very important for an individual, since it plays an important role in shaping one’s character, thought process and personality, not to mention the success rate in the chosen career path. College education is what makes one eligible to climb the corporate ladder or to be a skilled entrepreneur, and hence one should invest in the same in a wise manner. A student loan makes it possible for one to pursue their dreams with the help of a diploma in their chosen field of specialization. Well-qualified individuals are now in demand as most companies value specialization and diploma degree of an applicant along with other qualification nowadays, which makes student loans further necessary.

It is possible for one to avail student grants and scholarships for pursuing higher studies, but the competition is very fierce and the difficulties faced are immense. Not every student has the sufficient merit for winning the annual scholarship or education grants, and hence the role of student loan is undeniable for those who wish to advance their career in spite of a tight budget. The rising cost of living and the yearly inflation of the college fee in the United States by up to 8 percent make it impossible for several students to make it to the college – grants and student loan only serve to make the option of further education a suitable choice for them.

Student Loan –Types

Student loans can be of two types – government student loan options and the loan options approved by the private sector. One should note that the scholarships and grants offered by government and the institute itself do not classify under a loan option.

Government student loan options are offered to students from a poor monetary background, or for those students who are meritorious and talented but opt for dropping out of college owing to lack of access to proper monetary funds. These are approved as per the need and the merit of the student, and all applications are processed by the US Department of Education. These loans are often easy to apply for, as long as one has the right paperwork in order to qualify for the same. The qualifications are simple and straightforward – a student should promise meritorious quality to some extent in every exam in the college and previous courses, should be a US citizen, should be able to attend classes for a minimum duration and possess the paperwork which renders him or her eligible for the government funds.

Student loans approved by the government are provided for a low interest rate. Subsidized student loan options are available for students who can establish their underprivileged financial background, and can furnish sufficient proof for attending college for a fixed number of hours every term. Proof for the above clauses would need to be furnished every year for the continuation of the loan offer. Unsubsidized student loans are available as well, and there is no need for the student to dedicate half his time to college hours. The parents are required herein to repay a certain amount of loan within a pre-fixed timeframe, so that the student can be offered the continuation of the loan for next term at college.

The Federal Stafford Loan is another renowned government loan option, wherein the interest rates of the loan are extremely low, but the loan amount needs to be repaid within six months of the approval. This is granted for extremely meritorious students pursuing crash courses or specialization courses for furthering their career options, wherein there is a guarantee of swift repayment of the loan by the student.

There are several student loan options provided by the educational institute backed by government agencies. Known as Perkin’s Loan option, these are offered in the form of the loan or cash grants on the basis of merit. The magnitude of the loan amount and the repayment options are often determined by the College Board, and depend on the amount allotted by the Federal Reserve to the college. One is eligible for a supportive work study program, a job on campus, as well as an extended repayment term, provided that the student is meritorious and successful in acquiring a promising job offer.

Apart from the government student loan options or those offered by the university or college on its own, there always exists the option of private loans processed through banks or other financial institutions. Though the interest rates are higher, students can wisely combine these with government approved loans or cash grants so as to reduce the final loan burden on them.

Student loan – How to choose the right type

Weighing out one’s options according to their financial need and merit should be the first move while applying for student loans. Those with an impressive merit record throughout their schooling and graduation can easily qualify for a loan program or cash grants approved by government or institution.  Private student loan options are beneficial for individuals with less than impressive merit record, who can manage to pay a higher rate of interest of rate on the amount borrowed. Combining the two options is often a wise move, and debt consolidation becomes easy in such cases.

One can look out for the right student loan option with the aid of the internet – applications for different loan types can be downloaded from the right source on the internet, and swift online processing would ensure that the chosen loan option is offered within a few days.