Every one of us has the right to do the study in which we have an interest. We all want to pursue our dreams and fulfill them. But some of us are not able to do it. The reason can be economic conditions, non-supporting families, and lack of knowledge. Here is the one solution against poverty that is “Student advances.”
Whether you are a high school student who has completed his senior school studies and looking for a college of your worth or a graduate who is getting tensed to pay off your student debt, we all look for the option of “Student loans.”
Student loans are loans that provide you with the money for your educational expenses and you have to pay back that money with interest. Various organizations like a bank or financial institution and the federal government provide these loans.
Before adopting any loan, you should know its complete benefits and terms and conditions. There are many different kinds of student loans with different terms and conditions. These loans provide different benefits, amounts of money, and security. Broadly classifying, the two main types are private and federal student loans which are further arranged into sub-types.
TYPES OF LOANS:
Like the federal government provides federal student loans, private student loans are granted by a bank or financial institutions. This is because they want to make their own money and earn a profit. These loans are provided at a high rate of interest and that is why most of the students seek the option of federal student loans. Also, private loans have no other benefits like repayment program and forbearance options.
These are further classified into fixed-rate loans and variable-rate loans. In fixed-rate loans, there is no change in the rate of interest. The payments will remain the same in all the journey of paying whereas, on the other hand, variable-rate loans fluctuate the amount of interest. At the start of this loan, you might feel uncomplicated but in few years this loan can endure expensiveness. This type of loan can lead you to great loan debt.
Federal loans are provided by the federal government in which the rate of interest is decided by congress. Mostly, these loans are reasonable than private loans. To get these loans, you must complete the eligibility requirement by giving FAFSA. Based on your results, they may grant the amount of money. Also, these loans come with a number of benefits like student loan forgiveness and repayment terms.
Based on different eligibility requirements and interest rates, we can categorize these loans into four main categories:
DIRECT SUBSIDIZED LOANS:
Direct subsidized loans are provided to eligible undergraduate students who want to pursue higher studies at a college. These loans cover the financial need of a student. These loans do not accumulate interest under some terms and conditions.
DIRECT UNSUBSIDIZED LOANS:
These loans are designed and provided to undergraduate, graduate, and professional students who desire to do something big. The eligibility of these loans is not based on economic needs. Also, these loans are for those who have a strong rich background as these emanate interest. These loans will cost you a lot more money than your amount.
DIRECT PLUS LOANS:
Direct plus loans are made available to graduate and professional students and the parents of undergraduate students to meet the demand of education expenses. Generally, these are not based on financial need but as eligibility, you must have a good credit score otherwise your bad credit history can take a long process to get qualified.
DIRECT CONSOLIDATION LOANS:
These loans are unique in their own way. These are the kinds of loans in which you combine different existing federal loans into a single loan. These loans provide some new benefits and also extra money for your studies. Managing this loan is not very difficult but keeps one thing in mind that consolidating your loans will not change the interest rate and you can lose some benefits like forgiveness and repayment plans.
After reading the types, we think you have gained sufficient knowledge to select the loan for yourself. Skills and your excellence also matter a lot and this can help you get scholarships and grants which is a kind of free money that you do not need to pay back. By understanding the types and further information you can make the study of student loans easy for yourself. But before everything, you need to plan properly and work on that plan. By selecting the right option, you can live debt-free and fulfill your dreams happily.