College School Loans
When you start applying for your college school loans you will want to have an understanding about what you are getting into. There are a few types of college school loans available and each one has its own benefits, rules and potential problems. If you review the loan types you can decide which program works best for your financial situation and bill payments style. Even if you do not have a particular payment style as yet, you can start planning for future repayment by understanding the process now.
The Loans
College school loans are pretty much like any other type of loan on the market. You borrow money that is given to you all at once or over a set period of time that has to be repaid according to the contract you sign. Most college school loan programs allow you to defer payment until you have completed the program or dropped below a certain number of credit hours during the course of enrollment. There are three major types of college school loans:
Federal Student Loans – these are government backed loans that can be need based (subsidized) or not (unsubsidized) and have very low interest rates. These loans also benefit from having deferment and forbearance options available during repayment and the possibility of consolidation by the federal government after you have entered the grace period of the loan. Examples include the federal Direct loan program, Federal Family Education Loans and the Perkins loan program.
Private Student Loans – these college school loans are offered by private financial institutions like banks and credit unions. The interest rate on these loans is quite low but the loan itself is credit based, meaning you have to have good credit to get a great rate and a good deal. You can have a cosigner (read: parent) who has good credit to get a good deal. These generally take a bit longer to approve than federal loans and have fewer deferment and forbearance options. They can be consolidated, but should be consolidated separately from federal loans to retain the federal loans’ benefits. You can contact any bank branch to inquire about these loans and even find information online. Typically, you do not have to repay these loans until after graduation.
Parent Loans – these loans are taken out by the parents of undergraduate or graduate students to assist in paying for the college education. They are federally backed and have low interest rates. These college school loans must be immediately repaid and can be immediately consolidated.
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