There is no point in discussing it; higher education in the USA is expensive, and not everyone can afford it. Even a community college education requires savings, to say nothing of higher-class institutions. However, hundreds of thousands of American children and teenagers want to know more, graduate from college and improve their degrees. Moreover, they want to have better job offers in the future and live more prosperously.
In this case, if you have not been saving for the education of your child all your life, and this, let's face it, is very difficult, getting an average salary and educational loans can help.
What Are Education Loans?
An educational loan is a type of financial product designed to pay for tuition and related expenses. Often educational loans are unsecured, so you don't have to worry about the collateral and its return.
An educational loan can be spent on everything related to studies. First of all, of course, you can pay for your studies. But other than that, the student loan can be spent on housing, transportation, textbooks and other necessary materials, and additional courses.
There are two types of educational or, as they are also called, student loans: federal and private.
Types of Educational Loans
Educational loans, as mentioned above, are federal, that is, provided by the government, and private, which are provided by private lenders.
Federal student loans are provided by the US Department of Education. In order to receive them, first of all, it is necessary to fill out the FAFSA form. Such loans have a number of advantages over private ones. For example, interest rates on federal student loans are lower than those offered by private lenders. Also, you won't need to pass a credit check to get a federal student loan (with the exception of PLUS loans).
There are several types of federal educational loans:
- Subsidized loans. They are available to those whose financial situation (and the family's financial situation) is very difficult. At the same time, they have a grace period when the student is exempted from payment, usually during the entire study period six months after graduation.
- Unsubsidized loans. Such loans are available without additional conditions but do not provide for grace periods.
- PLUS loans. These loans are designed for graduates, professionals, and parents of dependent undergraduate students. They are aimed at compensating expenses that are not covered by other financial assistance. This is the only type of federal student loan that requires a credit check.
Private student loans, as the name suggests, are issued by private lenders. These can be banks, credit unions, and other financial institutions. Higher interest rates characterize private student loans. You also need a good credit history to get them, as you will have to pass a credit check. In general, getting a private student loan is a lot like getting a personal loan.
