Everyone believes in the importance of proper education. The hard part is obtaining the education itself. This is mainly due to high tuition fees and the myriad of expenses that a student undertakes like books, board and lodging and the daily expenses of being a student. The good news though is that there are a lot of student loans that one can take out. Student loans are a special kind of financial aid. Compared to all the loans that financial institutions offer, these are the easiest to pay but are the most rigid to take.
First and foremost, the only purpose that a student loan may be taken out for is educational purposes. Sometimes these are even called educational loans. So the most basic criteria for one to qualify to take out a student loan is that he is in fact a student. Another consideration before one is eligible to take out a student loan, is that the student must be in financial need, meaning the student has no means or needs help in paying for his schooling. The second thing you need to know about student loans is the different types that are available.
There are basically three types of student loans in the United States of America. One, there are the federally subsidized student loans; two, the federally unsubsidized student loans; and three, the student loans given by private banking institutions. The best student loans one can get, but the hardest to qualify for, are the federally subsidized loans. These student loans are basically your free pass to a proper education. Being federally subsidized means that the student will not repay the student loan. It is most commonly known as a grant, or a scholarship.
The only catch would be that the student has to maintain a relatively high standard of grades to keep his grant. Another federally subsidized student loan is known as the work-study program. This is basically similar to working a part time job to earn money for tuition fees. For the student loan, the student will work at a particular institution chosen by the granting agency. Instead of getting paid a regular income, the tuition fees are instead paid automatically and directly. Again, this type of student loan is subsidized which means it will not be repaid by the student.
The second general type of student loan is the unsubsidized. This is similar to taking out a regular loan, but since it is for a particular purpose and granted by the federal government, the interest rates are at a much lower rate than conventional loans, and payment on both the principal and the interest is deferred until after the student has left the school. Paying the loan applies whether or not the student graduated or not. The last type of student loans, which should also be the last resort, are the ones offered by private institutions.
The main reason is because of the interest rates which are more or less the same with conventional loans. The only advantage is that payment is also deferred until after the student has finished his education or left schooling. Make sure that you take all the free passes first before resorting to these private loans.