Education Loans
One never knows about the future. One does not know when he/ she is going to face financial crisis. The chances of financial crisis are more especially when you are attending a private university or college and you start running short of finances. It is always better to have a rough idea about the types of education loans that you can avail. The major categories of educational loans are:
- Student Loans : To finance their education, most of the students depend on the federal government loans. The rate of interest of this type of loan is very low. The formalities do not required any collateral or credit checks. A variety of option for deferred payment or terms for extended repayment are also available in this type of loan. Federal loans for student s offered by the federal government has two variations. One includes loans offered by private lenders like the credit unions , banks, loan and savings associations. The other includes loans offered by the government directly to the parents and students
- Parent Loans : In this type of loan the parents of the student apply for the loan to meet the expenses of his/ her study. The rates of interest are fixed. Repayment of this loan starts after 60days of full loan disbursement. This loan depends on the credit history of the applier. To get this type of loan in the USA, a student has to submit the Free Application for Federal Student Aid (FAFSA). The student also has to sign a master promissory note.
- Private Education Loans : the Private Education Loans are also called as Alternative Education Loans. Every know that the government loan is limited. Now if you want to borrow money beyond this limit you have to resort to borrowing from private lenders. These sort of loans depend on your credit score. The rates of interest are far higher than the government loans. It is always better to try for government loan and when there are no chances of a government loan then and then only opt for Private Education Loans .
- Consolidation Loan : Consolidation Loan is a combination of parents loan and students loan. It is like refinance of mortgage.
- Peer-To- Peer Education Loans : This type of loan is also called person to person lending, social lending, micro loans, microfinance. This is a nontraditional form of lending. It involves unsecured loan between persons.
One should always think about the rate of interest and repayment time before taking the loan. Other issues to be taken into consideration while taking a loan are the availability of student loan discount and the chances of loan forgiveness programs.
