Student loans are one of the most common ways young adults use to fund their schooling after high school.
As a lot parents do not have the funds to directly pay for their children's education after high school, a blend of scholarships, grants and student loans are used to pay for all costs of college or university, including tuition, books, housing fees and other expenses associated with going to college.
New students have access to a few kinds of student loans. The most common type found is the federal loan. This financing have smaller limits, and are usually restricted to paying for tuition fees only.
The federal student loans are tightly regulated by the government, and can be obtained through the college's financial aid packages. They usually have an extremely low interest rate, and the student does not need to start paying back the finances owed until they have either graduated or are no longer attending college full time.
When a young adult goes to apply for federal student loans, there are several things that should be kept in mind. First, there is typically a six month grace period associated with these types of loans. This means that from after the time the student finishes school or has fallen to half-time attendance, they will not have to start returning money to the loaner for six months. Interest, however, starts accruing as soon as you finish school school or have dropped to half-time attendance. All payments and money owed reflect on the student's credit score.
There are also student loans that are given to guardians rather than to the student. These loans have higher maximums, and the interest rate may also be higher than the federal student loans that tend to be issued. Interest also begins to accrue immediately. This is due to the fact that the adults is the one responsible for the loan, not the student. This method does not help improve the student's credit score.
Finally, there are non federal student loans. These go outside of the government regulated system, and are typically reserved for people who require more than the amounts granted to standard students. Private loans have the greatest amounts, and may also come with the highest of interest rates in addition to this.
Private student loans are granted either to the guardians or the students, and can be done through a series of banks as well as private loaners. This option is typically utilized by individuals going to really prestigious universities where federal money is not enough. Students can use both private and federal student loans at the same time if necessary.