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Types of student loans

Student loans are the most sought after financial help available to students aiming for higher education/distant education. Student loans are the most beneficial for students/parents who cannot afford college/university tuition fees or other related expenses. There are many types of student loans. The borrower may consider any of the different type of student loan according to his/her needs and loan terms and conditions.
Although loan types depend on the state/country the types of student loans can be categorized under the following heads. So basically there are five types of student loans which differ in aspect of interest rates, repayment schemes, consolidation factors and flexibility options. Thus the five types of student loans are:

FEDERAL STUDENT LOANS – This is the most basic type of student loan and also very flexible. The federal student loan is backed by the United States government. This type of loan provides good assistance through competitive interest rates and flexibility.

The interest rates of such loan is regulated by the congress and are hence much lower to other type of private or personal loans. The best bart of federal student loan is that it extends to the time when the student completes his/her education and attains the desired degree of graduation or course completion. Thus the federal student loan is very flexible, more popular and better than most other loans.

FEDERAL STAFFORD LOANS – This type of loan can be issued from a bank, credit union or any government offices and are given to students on the actual financial requirements and are handled by the federal government. Stafford loans focuses on long-term loans for students who are financially weak and cannot afford tuition fees for higher education.

The best part of this loan is that it’s flexibility options also allows people to be more at ease and the payments even can be postponed as well. In subsidized Stafford loans the government pays the interest of the loans when the student requests a grace period/deferment. One can also avail of unsubsidized Stafford loan which is a long-term loan with lower interest rate.

FEDERAL PLUS LOANS – This type of loan is available to parents whose children are pursuing their graduate/undergraduate degree from college as full or half time students.

The Federal plus loan is based on credit history and the cost of attendance. The interest rate for this type of loan is low but the repayment usually begins within 60 to 90 days after the full disbursement of the loan or after the time period after the student graduates.

FEDERAL PERKINS LOAN – Federal Perkins Loan is for students with high financial need and are awarded to deserving students. Usually Federal Perkins loan have very low interest rates and the interest rates do not start to accrue till 9 months after a student drops below half time enrollment/joining or graduates. Anyone can ask a college financial aid advisor to know whether he/she qualifies for the Federal Perkins loan.

One important thing to note about this type of loan is that if you are default on payments it can damage your credit as reported as credit bureau. However if someone does not qualifies for Federal Perkins loan other options include private loans from banks or other federal loans.

PRIVATE STUDENT LOANS – It is a matter of fact that all student loans cannot be accommodated by the federal student financial aid.  Thus private student loans are seen as alternative options in many cases.

Private student loans offer the same benefits, conveniences and flexibility as of federal student loans but have their own terms and conditions regarding interest rates or repayment options. The private sector banks have their own conditions and thus it is best to know and understand the terms/policies before applying for private student loans. Flexibility and loan consolidation factors might be little less than federal student loans but some the private student loans are good enough to go for.

These are the different type of student loans available as financial aids. However the borrower must research into the type of student loan before applying from a student loan adviser or appropriate websites. Mostly people would advise to go for federal student loans as they are backed up by the federal government and have more flexibility options rather than private student loans.

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