Types of Educational Loans Available to Students: Education is considered the backbone of a country’s development, and every student deserves the opportunity to pursue higher education regardless of their financial status. With the rising costs of education, it can be challenging for many students to fund their education without any assistance. Educational loans are one way to finance higher education, and there are different types of educational loans available to students. In this article, we will discuss the different types of educational loans available to students.
Federal Student Loans:
Federal student loans are loans provided by the U.S. Department of Education. These loans have fixed interest rates and offer several repayment options. There are two types of federal student loans: Direct Subsidized Loans and Direct Unsubsidized Loans. Subsidized loans are available to undergraduate students with financial needs, and the government pays the interest while the student is enrolled in school. Unsubsidized loans are available to both undergraduate and graduate students, but the student is responsible for paying the interest during the loan period.
Private Student Loans:
Private student loans are provided by private financial institutions like banks, credit unions, and other lending companies. Unlike federal loans, private loans have variable interest rates and require a credit check. Private student loans are often used as a supplement to federal loans or when federal loans are not enough to cover the cost of education.
Parent PLUS Loans:
Parent PLUS loans are federal loans available to parents of dependent undergraduate students. These loans have a fixed interest rate and are available to parents with good credit. Parents can borrow up to the cost of attendance minus any other financial aid the student receives.
Graduate PLUS Loans:
Graduate PLUS loans are federal loans available to graduate and professional students. These loans have a fixed interest rate and require a credit check. Students can borrow up to the cost of attendance minus any other financial aid received.
State-sponsored loans are loans provided by state agencies or organizations. These loans have varying interest rates and repayment options. State-sponsored loans are often available to students who are residents of the state and attending a college or university in the state.
Institutional loans are loans provided by colleges or universities. These loans have varying interest rates and repayment options. Institutional loans are often available to students who have exhausted all other financial aid options.