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All about student loans – Introduction

A student loan is a financial aid given by private banks, universities or federal government to help students pay for university/college tuition, books and living expenses. The student loans are also given by various non-profit organizations with low interest rates. Student loans are generally different from other type of loans in aspect of interest rates, repayment schedule and consolidation factors. The various aspects of student loans are listed below.

Student loan benefits

Thus there are a lot of freedom/advantages associated with applying for student loans. But before applying for student loans one should be familiar with the basic attributes of student loan and with its advantages/disadvantages. The benefit of applying for a student loan are immense as the student has the freedom to concentrate on his studies and have a good career as the loan covers all expenses.

Qualification for student loans

To qualify for student loans the students are expected to meet the following requirements.

  • The student has to specify financial need and loan amount.
  • The student has to be working for a degree or certificate level eligible program.
  • Income level of student’s future career and parent’s income level are taken in consideration to determine the maximum eligible loan limit.
  • Be a citizen of the respective country.
  • The student has to certify that loan taken will be used only for educational purposes and also certify that the student is not default on other student loans.
  • Students academic career, grants, scholarships (if any), are taken into consideration for most cases in applying for student loans.
  • Collateral guarantee or security has to be provided in case of some educational loans taken above a specified amount of money.

Repayment of student loans

Student loans generally have lower interest rates and easier repayment terms over conventional loans. The interest rates are about 2 % lower than normal conventional loans (varies from country, organization, banks).

Repayment of loan generally starts after six to twelve months. This is general referred to as the “repayment holiday” or “waiver period”. The student may also have the option to extend the repayment period which will decrease the monthly payment but also increase the total interest paid. Extended options associated with repayment of student loans also include federal load consolidation or hardship deferments.

Interest Rates

Interest rates for various organizations or banks or federal government depend on the nation/state. Normally federal student loan schemes have lower rate of interest compared to private sector banks. The calculation of loan interest starts upon the progressive withdrawal of loan amount from bank and the loan is paid by the student after the disbursal of the loan. A normal Google search for the “specified bank student loan interest rate” gives you the desired results. One should also see other terms and conditions such as “repayment terms” before selecting the student loan type giving the lowest interest rate.

Student loan alternatives

One of the good student loan alternatives are to look and apply for scholarships. Although some of the scholarships are competitive they can be achieved if you have a good academic record. Part time jobs are also a viable alternative for paying tuition fees or other fees related to education although they are a bit difficult to manage beside studies. Some employers even have options for tuition reimbursement in which the employer pays you to attend college. One can also take a heavier class load helps to lower tuition fees. Also attending a government school/college instead of an expensive private university is a good option as a loan alternative.


So above goes the all about student loan knowledge you need to know before applying for a student loan. But the student/parents must research the loan type and the organization providing the loan before applying for the loan. Always apply for the loan amount which you can afford to pay back. You can also consolidate your loans to have a fixed interest rate and enjoy some benefits. Thus a student loan one of the best way to go for secondary/higher education when you cannot afford the financial expenses.

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