EasyFinance.com Blog

Your Guide to Student Loans: What You Need to Know

Posted September 23, 2019 by EasyFinance.com to Finance 1 0

Choosing to continue education and gain a college qualification towards your chosen career is an admirable move – but it’s also an expensive one. The idea of a student loan and acknowledge debt can be a challenging concept to grasp for many students, but it’s part of the process, and it’s completely manageable if you have the knowledge to make an informed decision. In the first instance, it’s important to be completely sure that the qualification you are accepting a loan for is exactly what you want and will be beneficial to you. You don’t want to get into debt for nothing!

When Is A Student Loan Applicable?

You will need to take out and repay a student loan for any course of further education if you do not have the required funds already upfront – which many people do not, so you don’t have to feel as though you are on the backfoot if you don’t have the required funding! College courses and degrees are expensive, and it’s very unlikely you will have the money ready (but it’s obviously fantastic if you do). Student loans enable you to carry out the studies you intend and repay them back at a later date.

How Much Are Student Loans?

A loan amount will vary drastically in relation to whichever course or degree you are intending to study. A Bachelors Degree in Art at a traditional institution, for example, will be a different amount to the student loan required if you are wishing to undertake an online Masters in Education.

The cost for every course and qualification differs, and it is entirely dependent on what kind of qualification it is, which institution is providing the education, and the duration of your studies.

What About Online Degrees?

You will still need a student loan for those degrees carried out with an online institution. However, in most cases, degrees attained via distance learning or online methods have a lower price tag than those attained at a traditional institution where you have attended college or university in person.

All information on the cost of the online degree you wish to take will be available on the institution’s website and under the information provided for your specific degree option.

What Are My Loan Options?

Your loan options are split into two categories:

  • Public loans
  • Private loans

Public loans, also known as federal student loans, are borrowed from the federal government, and their interest rates are devised by Congress. There are many things which will affect the rates of a public loans, including the type of loan, whether you’re an undergraduate or graduate student, or whether you’re an external party, such as a family member borrowing money to help out the student in question.

Public loans also come in two categories: subsidized and unsubsidized.

Subsidized is only available to undergraduate students, and means you won’t pay interest on your loan while you’re still in school, during the six months after leaving school or if you’ve temporarily stopped loan payments. The interest will instead be paid by the government.

Unsubsidized is available for both undergraduates and graduate students. You will be responsible for paying all interest, and have the option to either pay whilst still in school, or allow the interest to build and pay it at a later date. Naturally, leaving it for longer will mean a higher rate in interest in the long run, as with any loan.

Private loans are more similar to any other general kind of loan, in which you would apply for a loan of the required amount with a private lender. The lender will determine whether they can happily loan you the amount, and will set an applicable interest rate. This is affected by factors such as your income and how likely it is that you will be able to pay the loan back (and this is where a good credit history is beneficial).

An interest rate on a private loan could be fixed or variable. You may also have the option to begin repaying the loan as soon as possible, or only repay after you have left school.

Which loan you choose is entirely dependent on your circumstances and which would work best for you – but with students, public loans are generally more popular due to the federal government’s assistance.

You always have the option for both, though.

When Do I Have to Repay My Loan?

As mentioned above, there are various options when it comes to repaying loan installments.

Public loans provide more flexibility due to the federal government’s involvement, meaning they can foot some of the interest and loan payments if you need to take a repayment holiday or defer your payments until after you have finished school.

With public loans, there is also the opportunity to be relieved of some of your debt if you qualify in a relevant public service job which aids the community and the government. The federal government will therefore alleviate some of the balance due.

The situation will be different with a private loan, whose terms and conditions are dependent and set out at the time of the loan installation. It’s important that you are comfortable with the repayment terms before you agree to take out the loan with a private lender. Private lenders can, however, be sympathetic to any difficult circumstance, such as the borrower being in financial difficulty, needing to take a repayment holiday, or needing help with their repayments. The options are available with a private loan, but there will be more flexible repayment options with a public federal loan.

The options for federal loan repayments include repayment charges based on the rate of your income – for example, you could be charged a reasonable amount based on the amount of income you make every month, which could be increased to a larger repayment amount if you begin to earn more money in the future.

All repayment options can be discussed in detail at the time of taking out your loan.

About EasyFinance.com: ...

Leave a Reply:

Only registered users can post comments.

Find More Products & Services