With rising education costs, and the necessity of higher education to achieve your goals with the help of better paying jobs and entrepreneurial experience, it has become necessary for the students of United States of America to secure student loans, and complete their education.
Student loans comes with multiple benefits, like little paperwork, no income proof required, multiple modes of repayment, payment of principal only after one has completed his or her education, writing off the loan after a specific time period even if there is balance, treating the interest as an expense in your tax filing returns, etc.
Recently, there has been a lot of commotion on forgiving entire or part of existing student loans. But we cannot plan our lives on such win falls. We need to plan on taking the best student loan, completing the education that matters to us, and choosing the best way to repay from the multiple repayment options, and finally to clear off the loan, to keep our tax records clean. If at all, there is pardoning from our education loan, then it will be treated as our sudden income, and will provide us with a lot of peace of mind, but, at the moment, it is not in our consideration for gathering information, or planning our future.
Types of Finances available for students, to fund their education:
The most popular form of loans in the US, federal student loans give the best of rates, and 10 different types of repayment options, not offered by others. Moreover, for economically weaker sections, federal loans can be subsidized as well, where the US government pays for the interest of the loan, and students repays only the principal part of the loan. You can also consolidate multiple student loans into one. More on the types of student loans in the US later in this article.
As the name suggests, for those who cannot avail federal student loans, or have already availed the advance once, can approach different private institutions, that extend loans to students, in favourable terms. The repayment options are far lesser though, and interest rates would be a tad bit higher, but they very well serve the purpose of achieving higher education with loan money.
A most desirable option to fund your education is through government grants. There are two such popular federal grants, but you will need to first see whether you qualify for them, both in terms of merit, age and course chosen. You can find all about the grants from the links below:
Please note that you will need to fill in the Free Application for Federal Student Aid (FAFSA®) form from the federal student aid website, and then apply for financial aid in form of grants in different educational institutes and colleges.
Almost all colleges and Universities in the US offer part or substantial scholarship, especially for meritorious students. Search the websites of the education institutes in which you plan to apply, and they will have the scholarship information given in their website. There are many trusts around the country as well, that extend scholarship to those who need them. Merit is the common criteria, choice of course also matters. Even if you save 20% of your fees and hostel expenses in lieu of scholarships, it still works out to be substantial savings, and relieving of a major chunk of your student education loan.
More information on Federal Student Loans:
As mentioned earlier, federal student loans can be subsidized and unsubsidized. Here is a quick difference between the two:
They are available to US undergraduate students. The amount is decided by the school or institute where you intend to take admission and your loan amount approved will never exceed the amount required by you at the institute for your education degree. You must prove that you are in financial need of the loan, and that your family income is not enough to pay for your education, whether in fees of for living expenses while you pursue your education.
Interest on the loan is paid by the Department of Education, USA, provided:
Direct unsubsidized loans are provided to any student of USA with US citizenship, and no income proof or need for financial help is required to be shown. They are available for any undergraduate or even graduate students of US, as long as they are US citizens. Here along with principle, the loan receiver is responsible for the interest payments as well. Your loan amount, as in all other cases, is decided by your educational institute, where you intend to pursue your education.
They are sought only after one has exhausted their federal loan options, or the federal loans are falling way short below the requirement, and after the grants have been applied and used for, where the private student loan can come in to fill in the shortfall.
If you have exceptionally good credit record, along with similar credit record of your co signer, then you can expect the private loan rates and expenses to closely match the federal loans, but such instances are rare. You generally pay more in interest rate, and/or fees at the beginning of the loan. If you need to take a private education loan, then shop for your product, and get offers from different banks and lenders, compare them, and then take your call.
Need more information or multiple offers? Do a quick Google search below:
Federal student loans offer a number of choices to repay your loan, and the best part is, you can always change the repayment plan in the future, suiting your financial and economic position at that time. So be stress free while making your choice, time will give you opportunities to rethink, and make changes, if necessary.
There are different options by which you can repay a federal student loan, they are:
If you have multiple federal loans, then you can also consolidate them, and choose a single payment plan, for the consolidated loan as well. Convenience of repayments is endless, when it comes to federal student loans.
Wish You All The Best! To your pursue of Higher Education