Getting an education is a very important part of preparing for a successful future. Apart from having to invest at least four years (or more) of your life for that college degree, there is also going to be a lot of cost involved. Knowing what is a student loan is a crucial step in that education. Many students take out student loans to pay for their education which can be paid back after graduation.
There are two main types of student loans available – the subsidized and the unsubsidized. Student loans may come from the Federal government (offering both subsidized and unsubsidized) and the other ones come from the private sector – which may also offer both types. A subsidized student loan is one which accumulates interest only after graduation and an unsubsidized loan charges interest during the entire time of the loan. Student loans can be used to pay for most school expenses, including the tuition and fees, the room and board, your books, supplies and even your transportation.
After graduation, it will be necessary to start repaying back the loan you took out for your education. With a Federal student loan, you do not need to begin repayment for six months after you complete your schooling. The Department of Education says that the government also provides a number of repayment options, which could make repayment easier than with other options.
The advantage of getting Federal student loans to get your degree is that these loans have lower interest than any other kind. This can enable you to save many thousands of dollars if you borrow most or all of the money needed to go through college.
Eligibility for student loans is usually based on your financial need and some other considerations. The official student aid website provides several qualifications, which includes:
- Being a US citizen, or an eligible noncitizen.
- Possess a valid Social Security number.
- Males who are between 18 and 25 must be registered with the Selective Service.
- Have completed high school.
- Maintain academic standing (good grades).
All applicants of Federal student loans have to fill out the Free Application for Federal Student Aid (FAFSA) forms. This form can be filled out online. Once completed, this will determine the amount of eligibility a student has for a loan and it will also determine how much can be borrowed.
The amount of money that can be borrowed partly depends on whether you are considered a dependent or an independent. It also will depend on whether you are taking undergraduate or graduate classes. Charts are available that show the amounts and limits of Federal student loans.
Several different types of education loans are available from the government. Some of these loans (Direct PLUS) are also available to parents who want to help pay for their child’s education. Interest rates are determined by the government. After graduation, government loans can be consolidated with other government loans for better terms, but they cannot be combined with any private loans.
Before applying for any student loans, a student should try to get as much free money for education as possible. This can come in the form of grants and college scholarships. By getting available free money first, the amount of money that needs to be borrowed in student loans with interest can be minimized – allowing the graduate to get out of debt faster after graduation. Understanding what is a student loan may, in fact, help you find an answer to the meaning of life.