What Is an Education Loan? An education loan is a loan which is made by an institution to a student or the parents of a student.
Hence, both, in amounts not in excess of the maximum amounts specified in rules adopted by the authority under 17A to finance all or a portion of the cost of the student’s attendance at the institution.
READ MORE: Ink Business Cash Credit Card Application – www.creditcards.chase.com/business-credit-cards/ink/cash
What Is an Education Loan
An education loan is a sum of money borrowed to finance post-secondary education or higher education-related expenses. Education loans are intended to cover the cost of tuition, books and supplies and living expenses while the borrower is in the process of pursuing a degree. Payment is often deferred while students are in college and depending on the lender.
What Qualifies as an Educational Loan?
A qualified educational loan must have been borrowed to pay for the education of the taxpayer, the taxpayer’s spouse or the taxpayer’s dependents. The student must have been enrolled on at least a half-time basis and cannot have been simultaneously enrolled in elementary or secondary school.
CHECK THIS OUT: What is Bank Transfer – Can a Bank Transfer Be Refunded?
How is Education Loan Repaid?
The repayment of EMI starts 12 months after the completion of the course or six months after getting employment, whichever is earlier for student and scholar loan schemes. Hence, in the case of Global Ed Vantage loans, repayment of EMI starts six months after the completion of the course.
Can Any Student Get a Student Loan?
You have a valid social security number (with a few rare exceptions) you are enrolled or have been accepted as a regular student in n eligible degree or certificate program and are qualified to obtain that education (by receiving a high school diploma, GED or other allowed high school completion verification).
READ MORE: What is a Debit Memorandum – Can a Debit Memo be Reversed?
How Much Interest is on a Student Loan?
Federal student loans for undergraduates currently have an interest rate of 4.99 per cent for the school year, while graduating students have interest rates of 6.54 per cent or 7.54 per cent for unsubsidized loans or plus loans.
How an Education Loan Works
Education loans are issued for the purpose of attending an accredited college or a university and pursuing an academic degree. However, educational loans can be gotten from the government or through private sector lending sources.
Furthermore, federal loans offer lower interest rates and some also offer subsidized interest. Hence, private sector loan generally follows more of a traditional lending process for application with rates that are higher than federal loans.
KEEP READING: What is a Correspondent Bank – What is the Limit on Wire Transfer?
Types of Education Loans
It’s important to say that there are many types of educational loans, but these loans are classified into two aim parts. This includes, “Federal student loans” and “Private student loans”
Federal Student Loans
This type of loan is available through the US department of education. You will have to submit a free application for federal student aid. This is known as the FAFSA, to access them. Well, most federal student loans with exception of plus loans do not require a credit check. However, its interest rate is not credit based but is set by federal laws and is typically lower than private loan rates.
Private Student Loans
This type of loan is available to students through banks, online lenders and also credit unions. Hence, while federal student loans have fixed interest rates and also come with maximum loan amounts, private student loans work very differently.
This is because these lenders typically use their own standards to set borrower requirements, but in general, a good or excellent credit score can give you the most competitive rate and also terms.
READ ALSO: Best Ways for College Students to Make Money Online
What Can Student Loans Be Used For?
As a student or an anticipating student who is preparing for entry into the higher institution of learning, you will have to cover lots of expenses. Hence, the need for this loan cannot be over-emphasized. Below is the list that a student loan can cover:
- Meal plans and groceries.
- Tuition and fees.
- Supplies and other equipment.
- Transportation costs, like gas or public transit, pass.
- Room and board. This includes an apartment and utilities. Etc.
- Technology expenses like a computer.
- School due and more.
With a student loan, you can be able to cover these expenses.
What Happens to Student Loan Debt when you Die?
As a student who wants to take a loan, from a private lender, you are expected to check the lender’s exact policy t confirm if your loan would be forgiven when you die. This is necessary as a primary borrower.
However, if you are a primary borrower who wants to lend from a federal platform, it is possible for your debt to be forgiven after your death. Hence, for a most private lender, it happens like that also.
KEEP READING: What is a Demand Deposit – How Does a Demand Deposit Account work
Are Student Loans a Good Idea?
Federal student loans are seen as good debt because they are an investment in the student’s future. This enables a substantial increase in the student earning potential. Federal student loans also carry relatively low fixed interest rates and offer flexible repayment options.
READ MORE:
