Student Loans

Student Loans

Student loans, like any other loan, have to be repaid to the lender. There are two main sources of student loans. There is the U.S. Department of Education, which has many federal student loan programs for students to take advantage of. Then there are commercial lenders and private sector financial entities, like banks. These institutions offer private loans.

Federal student loans and private loans have interest attached to them. The interest is a percentaged rate that keeps accumulating within a set cycle, starting from the date that the loan was paid out. There is also an origination fee, which is a one-time charge that is paid to the lender for creating the loan. Federal student loans tend to carry better interest rates, as well as better loan terms and conditions, than private loans. This is why pretty much all government, school, and private student and experts recommend taking advantage of as many federal student loans as possible, before taking on a private loan.

Federal student loan programs vary when it comes to eligibility requirements, loan amounts, interest rates, lender, and allotted repayment time. One federal loan program might distribute funds from the Department of Education. With another program you might have to pay your loan back to a bank. Still, another program may be sponsored by your actual school. Whatever the case you will have a more desireable interest rate, and loan terms, than you would with a private loan. No matter which loan program you participate in, the actual monies will be distributed to you through your school’s financial aid office.

Once you graduate, with a federal consolidation you can can combine multiple student loans into one single loan – making one monthly payment instead of many.

Student Loans