Student Loans

Student Loan Basics

Total student loan debt in the United States has reached $1.6 trillion. Student loans are an essential part of starting adult life as they allow students to fund their academic explorations and earn degrees. In 2021, the Biden administration made it clear that it intends to completely change the student loan process and eliminate student loan debt. ์นด์ง€๋…ธ์‚ฌ์ดํŠธ

While it’s unclear exactly what changes will be made, most likely a new, more efficient student loan process will be introduced.

What are student loans?

Student loans help students fund their post-secondary education, provided they repay the loan upon graduation. The borrowed money can be used to pay for tuition, living expenses, and consumables. A student lender can be a government or a private lender. There are two main types of student loans: government student loans and private student loans.

Federal loans are offered by the government and have interest rates set by Congress. Almost anyone can apply for federal student loans as long as they have a high school diploma and repayments do not begin until after graduation. Private loans are offered by private financial institutions. These loans are more difficult to obtain than federal loans because private lenders require proof of future repayment (eg.ability to pay, income and other factors).


While student loans may seem useful, they can be quite a hassle to repay later in life. The average amount of student loan debt per borrower in 2020 was $37,584. The main reason for this is compound interest. Compound interest loans increase the principal and interest loan amount each year from the previous year.

Lenders increase the return on a loan the longer the borrower defaults. Despite their lasting impact, student loans are the reason why many can afford higher education. A college degree is an essential part of any resume and a must for many job applications. Without student loans, 54% of Americans couldn’t afford to go to college.

How do you get a student loan?

If you take out a government loan to fund your education, you must file a FAFSA (Free Application for Student Aid). The form allows the government to determine the amount of credit you are eligible for. Even in the private credit industry, a loan must be applied for through a bank. The processes for the two types are not very different, except that it varies from bank to bank in the private sector. In the public sector, the government requires student borrowers to follow preliminary advice to let students know what they are getting into. The counseling sessions last approximately half an hour. Contact the student’s school for more information. ์˜จ๋ผ์ธ์นด์ง€๋…ธ์‚ฌ์ดํŠธ

Federal Student Loans

Offers the lowest interest rates and the most flexible repayment schedules. These loans are offered on an as-needed basis. Therefore, applying for government loans should be the first step in your college funding process. Government regulation also requires a student to sign a Master Promissory Note (MPN) in order to borrow money.

The MPN is signed by the student to indicate that they will repay the loan and interest. Private lenders also have an agreement that students must sign, similar to MPN. Most student borrowers require a co-signer to receive a personal loan. Special Federal Student Loans Directly subsidized loans are available to undergraduate students on an as-needed basis as determined by the FAFSA.

In the case of directly subsidized loans, the federal government pays the interest for the students while they are still at school. After graduating or dropping out of school, the student has 6 months to start repaying the loan and accruing interest. students with no economic need can apply for a direct non-refundable loan as they do not require proof of economic need.

Unsubsidized loans are available to undergraduate and graduate students, although interest is not borne by the government: therefore, interest accrues continuously from the moment the loan is made. Direct PLUS loans are also available in the public sector.

With these loans, parents can take out a student loan for their dependents and graduate students can take out a loan for themselves. PLUS loans are a separate application process from the FAFSA application and require a credit check.

Personal Student Loans

Personal student loans vary from bank to bank, are more expensive and have higher interest rates. Students also have to repay their loans while they are still at school; The student does not receive any government assistance to pay the interest.

The lenders have the opportunity to decide all the factors and terms of the loan. Private student loans can be advantageous because federal student loans are not available to students who have earned law or medical degrees and are preparing for the bar exam or pursuing a residency program. Private lenders offer specific loans such as B. Bar apprenticeship loans that cover bar exam fees, living expenses, and tuition review for students preparing for the exam.

Lenders also offer residency and relocation loans that allow medical and dental students to pay tuition to find a residency program. Some of the expenses covered by this loan are maintenance travel expenses, moving expenses and onboard survey expenses.


The amount of interest on a loan depends on several factors, including the repayment period, the interest rate and the principal amount. The repayment term is basically the time it takes to repay the loan. Federal loans typically have terms of 10 years, but can be as long as 30 years.

With personal loans, the contract between the lender and the borrower determines the term, which can also vary. ๋ฐ”์นด๋ผ์‚ฌ์ดํŠธ

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