Friday, 21 June 2013

Major Student Loans in the USA - An Overview

Major Student Loans in the USA - An Overview

By Eshwarya Patel

America is considered to be the world-leader in higher education, which is indeed very expensive in this country. If you are looking for a way to pay for your college or for the higher studies of your daughter or son, the best shortcut is to find a wealthy relative and ask him/her for a little assistance! But, the fact is that you do not need to do so as the federal government offers a large number of attractive student loan programs for all those who wish to study further but cannot afford it.

Following is an overview of some of the major student loans made available to the needy in the US:

1) Perkins Loan

Popular for its lowest interest rate, usually fixed at 5%, Perkins loans can be availed by both, graduates as well as the undergraduates. The repayment period is extended to as long as 10 years. This loan is very attractive for students who wish to pursue a career in public service fields, such as the military, law, non-profit jobs, and teaching, as the loan is discharged by the government in this case. Important things to bear in mind are first, these loans are made available to the applicants on the first-come-first serve basis and second, the concerned school/college acts as the lender.

2) PLUS Loans

PLUS Loans are offered to graduates and undergraduates, who are enrolled at least half-time. They are usually granted directly by the government. Although these loans have a cap of 7.9%, the interest rates charged are flexible. However, the loans that are distributed by the government through school or private lenders charge an interest rate of 8.5%. Besides, an additional fee is required to be paid by the borrower. The repayment period is extended to 10 years and the student must start the payment of monthly installments within 60 days of the disbursement of the final loan.

3) Stafford Loans

Like the PLUS Loans, these loans can be availed to graduates and undergraduates who are enrolled in school at least half-time. Usually, the amount of the loan that will be partially subsidized by the government depends largely on the financial needs of a student. The student is required to start the loan repayment six months after graduation, while the entire interest is paid by Uncle Sam during the school/college years. However, the 6-month grace period is not allowed in case the student applies for an unsubsidized loan. The rate of interest charged on these loans, both subsidized and unsubsidized, is capped at 6.8%, while their repayment period varies from 10 to 25 years.

How to Apply?

If you wish to apply for any of these loans, you must first apply for FAFSA, the Free Application for Federal Student Aid. However, applying for it does not guarantee you the loan. The loan amount will be granted to you by the government based on your financial condition and needs. To get all the details and avoid any last-minute confusions, get in touch with a financial aid counselor or a loan officer from a lending institution.

Find the Best Student Financial Aid Counselors in your locality and get more details on Shopping for Student Loan Rates on Online Loan Officers - The Ultimate Loan and Mortgage Guide.

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