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Student Loan Programs

College education is an integral chapter in a person’s life if he/she wants to achieve a job with a decent pay in today’s competitive world. However, it is also a harsh reality that not everyone can afford the expensive college education. To relieve the financial troubles of students, several financial aid schemes are offered by the government including federal loans. Moreover, many private financial organizations have also devised student loan programs to ease the education process of students.

Types of Student Loan Programs

Federal Loans:

A federal loan is a student loan program arranged by the federal government, and mainly consists of two types: Perkins and Stafford. Perkins Loan is a federal student loan program especially devised for students in need of extreme financial assistance. With a 5% low interest and a 9 months grace period, the loan is very student-friendly; moreover, the interest doesn’t accrue on the loan during the student’s education and grace period. Stafford Loan is the most common and popular federal student loan program with two types.

One is the subsidized version with almost the same benefits as the Perkins loan, but the student has to display financial need. The other is the unsubsidized direct loan where the qualification requirements don’t include the display of financial need. As the loan is unsubsidized, hence interest starts accruing as soon as the student receives the loan. Furthermore, Stafford Loans have a grace period of 6 months. Application for a Student loan program managed by the government requires an accurate completion and submission of the Free Application for Federal Student Aid (FAFSA).

Private Loans:

Private student loan programs are loans offered by private financial organizations. They usually have higher interest rates than federal student loans, and the interest starts accruing as soon as the student receives the loan. Some private student loan programs are arranged as collaborations between financial institutions and specific colleges or universities; these are called school channel loans. Other private financial institutions directly offer the loans to the students. Such direct-to-consumer loans can also be used to cover other education expenses besides tuition.

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