Something Important That You Should Know About Student Loans

By: David Bach Published: Thursday, July 29, 2010

Student Loans have made it easy for middle and lower class to get equal chances for studying in good colleges or in overseas universities. As scholarships are limited to lesser number of students then these loans become very helpful to the students who have dreams to join best institutions for higher studies. Various banks and private money lenders offer Student Loans with fixed as well as variable interest rates, different eligibility criteria and repayment plans. This report can be little helpful to you in choosing the one that suits you most.

Student Loans can be classified in two major types that are Federal loans and Private loans. Federal ones are government sponsored and generally charge fixed as well as low interest rates. A big disappointment with federal Student Loans could be that these loans don’t cover other educational expenses such as tuition fees, hostel charges, books, computers etc. You can borrow these loans through college or can directly go to banks or lenders. In some cases, to obtain federal Student Loans, one has to show financial need.

Private Student Loans do not ask to show any financial need and cover all education related expenses, have no maximum limit and can be obtained from private lenders. These loans charge higher interest rates and require a good credit history. Moreover, parents can apply on behalf of their ward if they have impressive credit score.

Federal Student Loans could be further categorized as Perkins Loans, Stafford Loans and PLUS Loans (Parent Loan Undergraduate Students). Perkins loans come with fixed interest rates, limited amount and require the borrower to show financial need. Stafford Student Loans includes also fixed and lower interest rates and no credit check is required for these loans. Stafford ones are of three types such as Subsidized, Unsubsidized and Additional Unsubsidized. PLUS Loans, as the name suggests, are disbursed to parents and have fixed rates of interest and these are the only federal Student Loans that require credit check.