A loan is a contract between two parties, according to which the repayment of the borrowed amount happens usually with some interest at a predetermined date in the future. In some cases, the contract is enforceable in the court of law. However, student loans are different from other general loans in terms of periods of repayment and rate of interest to be paid. Student loans have relatively longer durations for repayment and offer lower rates of interest.
Types of Student Loans:
Loans are of two chief classes, Private and Federal Loans:
Federal Student Loan
A federal student loan is for college students who want to pursue higher education by the Federal Government on lower interest rate and handsome repayment options. One of the dominant benefits provided by federal loan is the repayment policy and its duration begins after the student’s graduation, giving time and space to become able to return the loan. FAFSA facilitates the processing of Federal Student Loans usually.
Private Student Loan
Non-federal private institutions grant private student loans. The shortcoming of private student loan is the variable interest rate and lack of convenient repayment benefits.
PLUS loans are for the parents of the students, to help pay the remaining college expenses that are outstanding. In addition, students themselves can earn PLUS loans to pay off their college expenses.
Student Loan Limit:
A range of $5,500 to $12,500 annually is of students interested in an undergraduate degree. Graduates can get loans up to $20,500 annually.