Best Student Loans: If you are burdened to pay your college fee and need some help for the same, then Student loans are the best option in such a situation. Student loans are very helpful for aspirant students to pay for their college, fill the financial gaps as well as provide funds that are very crucial for covering their education-related expenses.
In general, there are mainly two types of student loans which are Federal Student Loans and Private student loans. Federal Student loans are issued by the U.S. Department of Education and that is why many students prefer this type of loan as it is safer and offers more flexible repayment terms as well. The difference between Federal Student loans and Private student loans is due to their variance in interest rates, eligibility criteria, loan modification options, and much more. If you are struggling to select the best option, then you can take advantage of this guide where we will explain to you about student loans so that you can effectively meet your higher educational goals.
What are the benefits of having Student Loans?
A student loan is the amount of money that an aspirant student receives from the federal or state government, or from a private company for paying their tuition and other school expenses. On the other side, the students have to pay back that money with interest after graduating from their college. There are many benefits of getting a student loan which we are going to explain down below:
- Student loans help in providing financial support to students to pay tuition fees so that they can attend college to follow their dreams. It is very helpful for students who are unable to pay for their college.
- One of the best things about student loans is that they do not require to have a credit history to receive this loan.
- Most often, student loans have low-interest rates as compared to many other private loans.
- There are flexible repayment plans in most student loans that can be adjusted accordingly as per to income and cost-of-living expenses of the borrower.
- There are many student loans that don’t require any repayment until after they are graduated. In addition to that, they also have extra options for postponement or loan forgiveness, if applicable.
What Are the Best Student Loans?
As we have mentioned above, there are two main types of student loans: private and federal. Both types of student loans come out as a great help to reduce the financial concerns of the students, along with building their credit scores. However, both loans differ in some distinct ways, but the majority of benefits come with the federal loan as compared to private loans. Even though Federal student loans are the best choice for many borrowers, due to their annual limits, some students may pursue private loans for making up for that gap in their college funding. Here is the comparison of Federal Student Loans and Private student loans:
Accessibility: In order to get federal student loans, the borrower must need to fill out the Free Application for Federal Student Aid (FAFSA). However, for accessing a private student loan, you don’t need to submit the FAFSA, but an application is submitted which includes borrowers’ personal and financial information (credit, income, etc.).
Qualifying for Student Loans: Qualifying for federal student loans is very straightforward and borrowers need to fulfill basic requirements. Some basic requirements are that the borrowers need to be U.S. citizens or eligible foreigners, and they must be enrolled in an eligible degree/ certificate program. However, qualifying for a private student loan is way more complicated as compared to a federal loan. Before issuing private loans, the lender is going to evaluate borrowers’ creditworthiness such as their income, credit score, credit history, etc.
Interest Rates: When it comes to interest rates, it plays an important and deciding factor in selecting the loan to choose. In this area, federal student loans have an upper hand over private loans due to their low, fixed-rate irrespective of borrowers’ credit score or income. Low federal loan rates are helpful for those students who have less or no credit history as private loans require a credit check, and a co-signer to qualify for their loans. Even though many private loans don’t charge any origination fees, their higher rates make the federal loan more suitable. However, most private lenders give borrowers an option to select between fixed and variable interest rates.
Borrower Benefits: Federal student loans offer more borrower benefits as compared to private ones. The borrowers get up to three years in deferment and forbearance in case they experience any economic difficulty. The students will get a six-month grace period after their graduation, along with getting a wide range of repayment plans as well. On the other hand, Private student loans might offer twelve months of forbearance and fewer chances to lower their monthly payments over the long term. Usually, most private lenders do not offer forgiveness to borrowers in some repayment plans.
Whether it is federal or private loans, one should take note that the application process and repayment requirements are associated with both student loans in order to make sure that you are responsible for making effective decisions regarding the funding of your education. Both types of student loans are very useful, however, federal loans are safer and offer greater flexible repayment terms. On the other hand, a private student loan will be helpful in covering the total cost of your school’s attendance if your other options have been exhausted. Overall, the best Federal Student Loans would be Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans for Parents & Graduates. This was all about the Best Student Loans; we hope you have learned something informative from this blog. If you have any questions regarding student loans, you can ask us in our comment section. Thank You for reading!