Student loans are very beneficial for students whose families do not have the financial means to pay for school out of pocket. Student loans allow students of all financial backgrounds to attend school without having to worry about paying for it upfront. This may help your free up time for studying and extracurricular activities, such as sports, or clubs.
What Is a Student Loan?
A student loan is basically a certain amount of money you are given by an organization, bank, or body of government, that you can use to pay for school, books, board, or anything that will help you be successful during your time in school. There is usually always a contract that stipulates you must pay back the loan over a certain amount of time.
Students are usually not responsible for paying back the loan while in school, and a little while after school. The payments may even be deferred until you land your first job.
How Does it Work
In order to get a loan for your education, you have to apply first. There are many places you can apply that will offer you student loans.
Government Loans
One of the most popular government loans is FAFSA. This is a federal student aid that is free to apply. If you are dependent on your parents or legal guardians, then you will need to use their income and information to apply for the grant. Most of the time, you will not have to pay back any money you get from this federal aid, however, in some instances, you may have to.
Private Loans
Private loans are usually loans given to you by a private organization, such as a bank or creditor agency. The application process for private loans is much different from the FAFSA application, which can be completed online. These loans must be paid back, and will usually have some kind of interest clause attached to it.
It’s important to pay back private loans because it may ruin your credit, however, you will not have to start making payments right away. The payments usually start sometime after graduation. You will have to pay back a private loan, even if you don’t finish school. Whatever was borrowed, must be returned plus some more.
Federal Loans
Most federal loan programs require you to have a counselor to help you get an understanding of how things work and the importance of paying back the loan. Getting a federal loan will bind you in a legal contract with the government that will stipulate the terms of receiving the loaned money.
There are many types of federal and private loans that you can apply to. You should consult with a financial or school counselor on ways to go about applying for a student loan. The first application you should fill out is the FAFSA. This will help you get an understanding of what money is available to you. Then you can move forward from there.
