Often, when a student starts to prepare for college, they do not realize what it entailed, and how overwhelmed they will be before the process is over.
The student loan process is a long and arduous process that most often will have to be repeated for multiple loans. Choosing the right loans and lenders will take a lot of time and research.
Government loans are offered to combat the rising cost of education. They realize that students and families cannot afford college on their own, and that it would be too much of a hardship to try.
Federal student loans given to students with the contract terms stating that the loans will be repaid when the student graduates from college. The standard repayment time is up to ten years.
Monthly payments are generally what the student pays, and the amount is in accordance to their income. There are some repayment plans that will raise their payment every couple of years because in the real world, raises and promotions occur frequently.
Keep in mind that with federal student loans comes a very high interest rate. This rate is figured into the loan repayment and over a ten-year period, can far exceed the original loan amount.
Other types of student loans include a parent loan and a private student loan. A parent loan is just as the name indicates. The parent or parents may borrow money to cover tuition for college, however one of the major drawbacks to a parent loan is that once the loan has been approved, the repayment process starts immediately.
A private student loan involves the student applying to a bank or lending institution. Once approved the student can attend college worry free until he or she graduates. The repayment process for a private student loan is only six months however in some instances, it can be extended for up to one year at the discretion of the lending institution.
With the rising costs of higher education growing everyday, students and their families need to know what they are facing when it comes to student financing. It is crucial that you do as much research and ask as many question as necessary for you to be comfortable with your choices.
Once you have signed the application and then the contract, you are legally responsible for the repayment process. Good luck with your schooling!