Student Loans In The United States

Student Loans In The United States

Student loans in the United States are a form of financial aid used to help more students access higher education. Student loan debt has been growing rapidly since 2006, rising to nearly $1.4 trillion by late 2016, roughly 7.5% GDP. Approximately 43 million have student loans, with an average balance of $30,000. Loans usually must be repaid, in contrast to other forms of financial aid such as scholarships, which never have to be repaid, and grants, which only rarely have to be repaid. Research indicates the increased usage of student loans has been a significant factor in college cost increases.

Types of Student Loans:-When you are exploring ways to pay for college, career, or technical schools, you may consider taking out a student loan—money you borrow to help you cover your education expenses and that you must pay back with interest.Student loans originate from the federal government (called “federal student loans”) or from private sources, such as a bank, credit union, state agency, or school. Learn the differences between federal and private loans before considering a loan.

Federal Student Loans:-If you need to borrow money to pay for college or career school, start with the more affordable federal student loan:

Types of Federal Student Loan Programs :- The William D. Ford Federal Direct Loan (Direct Loan) Program offers four types of Direct Loans:    

Direct Subsidized Loans are made to eligible undergraduate students based on financial need.
Direct Unsubsidized Loans are made to eligible undergraduate, graduate, and professional students, and are not based on financial need.
Direct PLUS Loans are made to graduate or professional students and parents of dependent undergraduate students.
-Direct Consolidation Loans allow you to combine all of your eligible federal student loans into a single loan with a single loan servicer.

The Federal Perkins Loan Program is administered through the schools, and awarded to undergraduates and graduate students with exceptional financial need. If you are eligible, you should take this loan first.

Eligibility:-You must be enrolled at a school that participates in the school loan program, and meet the general eligibility requirements.

How to apply:-Complete the Free Application for Federal Student Aid or FAFSA. Watch this video to learn more about what happens after submitting your FAFSA.

Private Student Loans:-Before taking a private loan, make sure you need it. These loans generally are not as affordable as federal student loans, and offer little repayment flexibility. Read these tips before getting a  private loan.

International Student Loans:-You should always carefully evaluate how much money you will need to study in the USA. Then you will need to research and apply for scholarships, financial aid from your school, and find money from any other source, including family funds. After exhausting these avenues, most international students still have a funding gap, and that’s where international student loans come in.

What is an International Student Loan:-Federal student loans are popular with US students studying in the US, but they are not available to international students. Instead, international students are eligible for international student loans, specialized private education loans available to international students studying in the US.International Student Loans are now a very realistic way to finance your education in the US. Loans are very flexible, and can offer loan amounts high enough to pay for your entire education, but with extended repayment terms and reasonable interest rates, so you can afford the repayment after you graduate.

Co-Signers:-All international students applying for loans must have a US co-signer in order to apply. A co-signer is legally obligated to repay the loan if the borrower fails to pay. The co-signer must be a permanent US resident with good credit who has lived in the US for the past two years. The co-signer is often a close friend or relative who can assist in getting credit, since most international students cannot receive credit on their own.

Interest:-Interest is the amount charged by the lender in addition to the amount of money that you borrowed. The interest rate is calculated based on an index plus a margin that will add an additional percentage interest rate depending on your co-signer’s creditworthiness. The two most common indexes used for international students are the Prime Rate and LIBOR Rate.

 –Prime Interest Rate – This index is determined by the federal funds rate which is set by the US Federal Reserve.
 LIBOR – The LIBOR (London Interbank Offered Rate) is based on the British Bankers’ Association and is used on the London interbank market. The rate is an average of the world’s most creditworthy bank’s interbank deposit rates for overnight and one year terms.

When evaluating the loan, the lender will clarify which index the plan uses. Then, there will be an additional margin that will be added based on the borrower’s individual criteria, including the co-signer’s credit history. Based on their creditworthiness, an additional interest rate will be added to the index. This will be the total interest you owe. When your application is approved, your specific margin will be disclosed to you, at which point you can accept or refuse the loan.

Repayment:-Repayment will vary depending on the loan option you choose. Since most international students are not able to work while they study in the US, repayment must be considered as an extremely important feature in your loan. You will need to consider how much the monthly payments will be, when payments will begin, and how long you will be able to defer paying back the loan. The repayment period generally ranges from 10-25 years, but the larger the loan, the longer the repayment period. The standard repayment plan options are:

Full Deferral – Students are able to defer payment until 6 months after graduation as long as full-time status is maintained. Students can defer payments for a maximum of four years, which is the typical length of a degree.
Interest Only – International students only pay the interest while in school, up to four consecutive years, and can defer the principal until 45 days after graduation, or when the student drops their course load to part-time.
Immediate Repayment – Payments on both interest and principal are due immediately once the loan has been dispersed.

Frequently Asking Questions:-

Who is eligible to apply for international student loans?
Students who are not US citizens or non-citizen permanent residents and who are attending an eligible US college or university may apply for international student loans.
What can international student loans be used for?
International student loans can be used for education-related expenses such as tuition, books, fees, insurance, and room and board.
What is the maximum loan amount I can apply for?

You can apply for up to the total cost of education, minus other aid, as determined by your school. In order to determine your maximum loan amount, you will need to contact your school’s financial aid office. After you apply and receive credit approval for you and your co-signer, your school must certify the amount of the loan.

Content Credit :- mp3skulls

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