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Can anyone answer the question “what is a student loan?”

I am the first born in our family looking forward to joining university for my Bachelor’s in the fall. I have been tasked with researching the aspects of university life. I have recently come across student loans. I think student loans are not that straightforward. I can’t understand a lot about private loans for college and loan forgiveness programs.  

So what is a student loan? Please advise me to help me and my family plan our finances.  Moreover, please provide relevant information on how I get a student loan number.

Whitney Matthews

in Student Loans

1 answer

1 answer

Ross Pratt on May 8, 2018

Most students who have just graduated from high school do not have adequate information about student loans. And they are not to be blamed; no high school student should be thinking about what a student loan is instead of preparing for their finals.There are two types of student loans to help you finance your college education. These are private loans and federal loans.

A private student loan for college is a loan obtained from a credit union, bank or any other private lending company to help you pursue college-level education. This financing option is to help you supplement your federal loans. These loans should not replace your federal loans.

Private loans are often advertised by their providers to reach a vast market. Despite higher interest rates, some of these private loans offer deferral and forbearance options. The interest on your private loans accrues for the entire duration of your study. You are required to start making your payments immediately after receiving your loans, right after completing school, and in some cases some months after graduating.

The interest rates on private loans are higher than those of federal loans. When applying for a private student loan, you might be required to part with some processing fees. These loans often have stringent requirements such as a creditworthy co-signer, third-party guarantors, and so forth.

Some of the lenders providing private loans include Salli Mae, SunTrust Bank, Discover, Wells Fargo, College Ave Student Loans, and so forth.

On the other side, federal student loans are loans offered by the government to help you pay for your post-secondary school education. When compared to private student loans, federal loans offer more benefits. Some of them include:

  • Fixed and lower interest rates
  • You will not have to start repaying your federal student loans until after you graduate
  • You can qualify for a subsidized loan as an undergraduate student
  • Your interest may be tax deductible
  • No prepayment penalty charges
  • You can be eligible for government programs such as the loan forgiveness program- the cancellation of your obligation to repay whole or part of your loan.

You should exhaust federal student loans before you consider taking a private student loan for college. For more information on federal student loans, you can contact the student loan support office. You can access the student loan no that you can call to inquire about anything regarding federal loans. 

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