Student Loan FAQs – Answered by Experts

The laws regarding student loan differ country to country. In the United States, students loan are of two different types.

One is sponsored by the federal government, also known as federal loans. The other is called a private student loan. A private student loan is provided by schools. These private schools include non-profit and institutional loans.

Most of the students go for federal loans. Federal loans are again of two types- subsidized and unsubsidized.

Subsidized federal loans may not charge interest while you’re still in school. Unsubsidised federal loans start charging immediate interest while you’re still in school. However, unsubsidised loans are not meant to meet financial needs. These types of loans are basically for post graduate students.

A subsidise loan is for an undergraduate and graduate student. They are generally based to meet financial needs. These loans cover the educational needs including the entire expense minus family contribution.

Students have the option to add interest to the actual amount for unsubsidised loans. However, it may increase the value of total amount to be paid. It would be better to pay the interest regularly to avoid burden of paying a huge amount.

Though, federal loans are less expensive.

FAQs on student loan or educational loan:

1. Which is the best option for choosing student loan?

Ans. Students loans are provided by the banks, federal government and private schools.

However, choosing a federal loan can be an advantage. Federal government loans are less expensive, whereas private schools charge high interest rate.

To apply for a federal loan, you will be asked to fill a free application form without which you will not be considered to take a loan.

2. What should I keep in mind before opting for a student loan?

Ans. Keep in mind this certain things before you choose a student loan.

• What is the cost of the loan? Including rate of interest
• How much interest is being charged?
• What is the annual percentage rate?
• Time period for repayments
• Are there any discounts on early repayments?
• What were the considerations for the selections of student loans?

3. What are the repayments options in a student loan?

Ans. Repayments of loans depend on type and period of the loan you have taken. If the loan is made to be half-time, you are not required to repay while you are still in school. However, you are required to repay if a loan is taken on parents or a guardian’s name being in a school.

• Deferment: deferment is considered to be an immediate start of repayment. You don’t wait to complete the school program.
• Interest only payments: In interest only payments you pay only interest being charged on the loan while studying in a school.
• Full deferment: Full deferment means repaying of loan after the completion of the school program. This plan includes repaying of interest plus the amount of loan. Probably, you wait to leave the school then pay for the loan.

4. How can I apply for a student loan?  Or

What are the requirements to apply for a student loan?

Ans. There are certain requirements and information that you need to know before applying for a student loan.

• Check on banks providing student loan
• Some banks ask to apply from the home country of the student
• In the United States, there are banks that offer students loan to outside the country students.
• International students are required a co-signer who must be a permanent resident or citizen if U.S.
• Credila by HDFC bank in India provides an international student loan which again asks for a co-signer.
• If applying for a federal loans, filling out this free application is must.
• Federal loans are less expensive than private loans.
• There are general information needs to be provided such as: Full name, date of birth, id proof, your permanent address, name of the school.
• In case of a co-signer social security number, contact and employment number is needed.

5. What will happen if I don’t pay back the student loan?

Ans. This will probably leave you more in stressed situation if it happens in case.

• If your due date gets over, you become a defaulter
• You are now subjected to up-to 15% garnishment as per federal government policies.
• Your lender will give you number of calls. If you still don’t pay back they will find ways to get the money back. Probably by contacting the school who own your loan.
• The lender may take action against you for not repaying the loan.
• However, you can have your repayment postponed before the deadline. You need to contact your lender and have a talk about it.
• Once you go in defaulter list, you are not eligible for change in repayment plans or student loan forgiveness.

Not repaying student loans can make you lose your job, house and life style in short.

6. How are other loans different from student loans?

As we talked before, there two types of loans – private and federal loans. Federal loans must be given a consideration. Federal loans are provided by the federal government. They are less expensive. However, the interest to be paid starts immediately while you are still in school.

Private loans are provided by private schools. They are generally expensive. The rate of interest is high and gets hard to repay.

The interest rate for federal loans are fixed rate. They are probably lower than private loans.

7. How much student loan federal government provides?

• $12,500 annually and $57,500 in total for undergraduate students.
• Graduate can borrow about $20,500 annually and total amount $138,500
• There are definitely limits to your borrowing range.
• Moreover, because you can borrow efficient amount doesn’t mean you should borrow. Consider your requirements and accordingly borrow the loan.
• Make it easy to payable after you complete your school.

8. What is a PLUS loan?

Ans. A PLUS loan is considered for graduate and professional students.

Plus loan can be borrowed by parents. It covers the cost of attendance of the school including tuition fee, books, supplies and living expenses.

You must go for subsidized and unsubsidized loans as PLUS loans are higher in paying rate of interest.

9. What are the requirements for PLUS loan?

Here are the requirements:

• Need to be a parent or guardian of a dependent student
• Be a U.S. citizen or hold eligibility of the citizenship
• Pass a credit check
• Should not be on default for any other federal loan
• Need to be an independent student
• Should be enrolled half time
• Not more than 23 years age