How to Get a Student Loan?

These days, a college education comes with a hefty price tag. Fortunately, various types of financial aid is available to help you cover the costs of higher education. One method you can use to finance your education is student loans.
  
What is a Student Loan
 
A student loan is money borrowed by a student to assist in paying for the costs of higher education. Unlike scholarships or grants, student loans must be repaid soon after graduation or the termination of studies. Student loans usually charge lower interest rates than other types of loans and can be issued either by the government (federal student loans), banks or finance companies (private student loans).

Different student loans that are available include:

  • College Student Loans: A generic term, a college student loan is a loan used to pay for college. Although universities frequently disperse the federal student loans on behalf of the government, they do not offer loans themselves.
  • Educational Loans: This is also a generic term used to talk about any loan used to finance education. The terms "school loans," "student loans" and "educational loans" all refer to the same general thing: money you borrow to pay for school.
  • Federal Student Loans: Federal student loans are loans made by the federal government. Federal student loans usually offer a lower interest rate than private loans, such as those made through a bank.
  • Private Student Loans: These loans do not come from the government but rather through a private institution, such as a bank.

    Although interest rates are generally higher, the maximum loan cap is often higher than that of the government.
  • School Loans: This is a generic term used to talk about any loan that is used to pay for school. The terms "school loans" and "student loans" are interchangeable.
 

Who Can Apply for a Student Loan

Anyone can apply for a student loan, if they are enrolling in some type of continuing education. Applying for financial aid is free, so you won't have to worry about paying application fees.

Financial aid packages vary according to your income and savings. They also differ depending on the college you are planning to attend. You can pick up an application for a federal student loan at many government-affiliated offices, such as the library. Or, you can access an application online through the government's financial aid Web site.

You can complete the application process yourself, although some companies offer services to assist you.

Student Loan Payment

In some instances, you can make student loan payments while still attending college. Generally, however, you won't have to make student loan payments until six months after graduation.

If, however, you're not able to start making payment after six months, you can apply to get your payments deferred if you:
  • decide to continue your education
  • participate in government programs such as the Peace Corps
  • suffer financial hardship.
 

Student Loan Consolidation

Each school year, you may take out a variety of student loans. Keeping track of the loan balances, lenders, varying interest rates and other details can become confusing. Student loan consolidation is an easy and often cost-effective way to manage your student loans.

When you consolidate or refinance your student loans, a lender effectively buys out all of your loans. After that, you have one big loan to pay back instead of many smaller loans. An extra incentive for student loan consolidation is that you can lock in low interest rates rather than watch your interest rate slowly increase over the years.
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