Attending school is a milestone because it can get really expensive. With some options already in mind, you should look at the student loan alternatives that are accessible to a college undergraduate. Educational loans can be very tricky, and are very confusing to most. In many situations, families are accepted for all different kind of loans and then are left in the dark when it is time to pay it back or do not realize that they owe as much due to accrued interest. With high interest rates and very unforgiving payment plans, it is advisable to really know what options are available to you prior to being seduced by college lenders with promises of fast money.
You could already be somewhat familiar with the terms 'Federal Student Loan' and 'Private Student Loan'; these are the two most popular types educational loans being used today. Do not allow the terms to deceive you, as they don't sound completely different, they come with very different stipulations and payment approaches in terms of how the money should be repayed. An educational loan is anything that is aided to the student or their family from the government or school the student plans to attend. These loans the student will pay back with interest at a later date.
A federal education loan is a specific type of loan that is aided to the student from the federal government; this enables the student to loan what the student needs financially. There is no need to pay the money back until the student has graduated from college or has otherwise decided to stop attending school. This loan can be used for books, transportation, moving costs, or a variety of other scholastic needs. When trying to get this loan the student may even find out that they are entitled to grants they were previously unaware of.
There are a number of different lenders that would certainly try to provide a loan. This is done to make money off interest and fees. It is the student's job to weed out bad loans and discover federal student loan providers that do not charge outrageous interest rates. Federal educational loans are typically the smaller loan amounts given to students and generally have a more relaxed repayment plan.
A private educational loan is a way more popular loan because these loan out much higher lump sums. This loan is provided to the student if they qualify after applying (to the lender of their choice). The money requested is commonly given to undergraduates in a large check but tend to contain hidden charges and exorbitant fees to repay. Generally, 3% to 4% in fees matches 1% interest rate. A private student loan is more difficult to get and has more complex repayment terms. The only reason a student should try for a private student loan is if they have maxed out the federal student loan amount and have hardly any other alternatives.
Due to comprehending the difference between a federal and private student loan, students can better prepare themselves for the eventual repayment terms beforehand and fully focus on their college experience.
Michael Saunders is an editor of TopGovernmentGrants.com. He maintains Websites providing resources on grants for non profits and grants for small business.
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