• Business

    Business Ideas

    ALL
    • In-Demand Businesses
    • Businesses That Never Fail
    • Best Passive Income Ideas for Increasing Cash Flow
    • Essential Tips To Start An Online Business
    • Best Websites To Buy Or Sell An Online Business For Free
    • Everything You Need to Know About Online Selling 
    • Current Business Trends: 9 Things to Keep in Mind
    • How to Open a Coffee Shop Business: A Comprehensive Guide
    • Effective Ways to Start your Business from Scratch 
    • The Main Types And Advantages Of Online Business
    Menu
    • In-Demand Businesses
    • Businesses That Never Fail
    • Best Passive Income Ideas for Increasing Cash Flow
    • Essential Tips To Start An Online Business
    • Best Websites To Buy Or Sell An Online Business For Free
    • Everything You Need to Know About Online Selling 
    • Current Business Trends: 9 Things to Keep in Mind
    • How to Open a Coffee Shop Business: A Comprehensive Guide
    • Effective Ways to Start your Business from Scratch 
    • The Main Types And Advantages Of Online Business

    Tips For A Successful Business

    ALL
    • Creative Business Proposal Ideas for Better Sales
    • Easy Digital Marketing Strategies for Small Business
    • Easy Steps to Develop Effective Time Management Skills
    • ClickUp, Trello or Hive?
    • Best SEO Tips for Small Businesses
    • Lessons Every Business Can Learn From Coworking Spaces
    • The Best Digital Marketing Strategies for a Real Estate Business
    • Useful Tips to Make Your E-Commerce Business Successful.
    • Why Do You Need to Track Your Spending
    Menu
    • Creative Business Proposal Ideas for Better Sales
    • Easy Digital Marketing Strategies for Small Business
    • Easy Steps to Develop Effective Time Management Skills
    • ClickUp, Trello or Hive?
    • Best SEO Tips for Small Businesses
    • Lessons Every Business Can Learn From Coworking Spaces
    • The Best Digital Marketing Strategies for a Real Estate Business
    • Useful Tips to Make Your E-Commerce Business Successful.
    • Why Do You Need to Track Your Spending
  • Money

    Invest Money

    ALL
    • Best Safe Investments
    • Investing In Real Estate
    • How To Invest: Are Your Investment Right Your Age
    • Best Alternative Investments
    • Best Investments To Beat Inflation
    • How To Invest In Collectibles
    Menu
    • Best Safe Investments
    • Investing In Real Estate
    • How To Invest: Are Your Investment Right Your Age
    • Best Alternative Investments
    • Best Investments To Beat Inflation
    • How To Invest In Collectibles

    Banking

    ALL
    • Best Savings Account
    • Best High Yield Savings Account
    • Best CD Rates
    • Best Money Market Accounts
    • Best Online Checking Account
    • Best Banking Apps
    Menu
    • Best Savings Account
    • Best High Yield Savings Account
    • Best CD Rates
    • Best Money Market Accounts
    • Best Online Checking Account
    • Best Banking Apps

    Loan

    ALL
    • Best Personal Loan
    • Best Low-Interest Personal Loans
    • Best Personal Loans for Bad Credit
    • Best Personal Loans for Excellent Credit
    • Best Debt Consolidation Loans
    • Best Student Loans
    Menu
    • Best Personal Loan
    • Best Low-Interest Personal Loans
    • Best Personal Loans for Bad Credit
    • Best Personal Loans for Excellent Credit
    • Best Debt Consolidation Loans
    • Best Student Loans

    Insurance

    ALL
    • Sproutt Life Insurance Reviews
    • eHealth Insurance Reviews
    • Cheap Car Insurance Reviews
    • Embrace Pet Insurance Reviews
    • Best Rideshare Insurance Reviews
    Menu
    • Sproutt Life Insurance Reviews
    • eHealth Insurance Reviews
    • Cheap Car Insurance Reviews
    • Embrace Pet Insurance Reviews
    • Best Rideshare Insurance Reviews
  • Forex

    Featured

    ALL
    • Best Forex Trading Courses
    • Best Forex Academy
    • Best Forex Trading Coaches
    • Best Forex Mentors
    Menu
    • Best Forex Trading Courses
    • Best Forex Academy
    • Best Forex Trading Coaches
    • Best Forex Mentors

    Learn To Trade Forex With Dumb Little Man

    ALL
    • Best Forex Brokers Review
    • Best Forex Trading Software
    • How To Trade Forex
    • How to Read Forex Charts
    • Best Forex Indicators
    • Best Forex Screeners
    • Best Time To Trade Forex
    • Best Forex Trading Tools
    • AvaTrade Review
    • CedarFX Review
    • Forex.com Review
    • Interactive Brokers Review
    Menu
    • Best Forex Brokers Review
    • Best Forex Trading Software
    • How To Trade Forex
    • How to Read Forex Charts
    • Best Forex Indicators
    • Best Forex Screeners
    • Best Time To Trade Forex
    • Best Forex Trading Tools
    • AvaTrade Review
    • CedarFX Review
    • Forex.com Review
    • Interactive Brokers Review
  • Stocks & Crypto

    Stocks

    ALL
    • Best Stock Brokers
    • Best Online Brokers for Stocks Under $100
    • Best Online Brokers for ETF Investing
    • Best Brokers for Mutual Funds
    • Best Online Brokers for Bonds
    • Best Blue Chip Stocks
    • Best Swing Trade Stocks
    • Stages of a Stock Market Bubble
    • Best Stock Investing and Trading Podcasts
    • Best Defensive Stocks to Invest
    Menu
    • Best Stock Brokers
    • Best Online Brokers for Stocks Under $100
    • Best Online Brokers for ETF Investing
    • Best Brokers for Mutual Funds
    • Best Online Brokers for Bonds
    • Best Blue Chip Stocks
    • Best Swing Trade Stocks
    • Stages of a Stock Market Bubble
    • Best Stock Investing and Trading Podcasts
    • Best Defensive Stocks to Invest

    Cryptocurrency

    ALL
    • Best Cryptocurrency Trading Courses
    • Best Cryptocurrency Brokers
    • Best Cryptocurrency Exchanges
    • Best Cryptocurrency Apps
    • Learn about Cryptocurrency
    • How To Earn Cryptocurrency
    • How to Trade Cryptocurrency
    • Best Cryptocurrencies
    • Best Crypto Trading Bots
    • Best Crypto Portfolio Trackers
    Menu
    • Best Cryptocurrency Trading Courses
    • Best Cryptocurrency Brokers
    • Best Cryptocurrency Exchanges
    • Best Cryptocurrency Apps
    • Learn about Cryptocurrency
    • How To Earn Cryptocurrency
    • How to Trade Cryptocurrency
    • Best Cryptocurrencies
    • Best Crypto Trading Bots
    • Best Crypto Portfolio Trackers
  • Health

    Health Conditions

    ALL
    • Macular Degeneration
    • Testosterone
    • Constipation
    • Hormonal Imbalance
    • Stomach Bloating
    • Sleeping Problems
    • Baldness
    • Lower Back Pain
    • Toenail Fungus
    • Mouth Sores
    • Eye Dark Circles
    • Stomach Bloating
    • Headaches
    • Face Acne
    Menu
    • Macular Degeneration
    • Testosterone
    • Constipation
    • Hormonal Imbalance
    • Stomach Bloating
    • Sleeping Problems
    • Baldness
    • Lower Back Pain
    • Toenail Fungus
    • Mouth Sores
    • Eye Dark Circles
    • Stomach Bloating
    • Headaches
    • Face Acne

    Product Reviews

    ALL
    • Diet & Weightloss
    • Exercise and Fitness
    • Beauty and Skin
    • Hair and Nails
    • Strength Training
    • Yoga
    • Dietary Supplements
    • Over-40 Supplements
    • Sexual Health
    • Dental Health
    • Men’s Health
    • Women’s Health
    • Sleep and Dreams
    • Best Weight loss Supplements
    • Best Fat Burner Supplements
    • Best Hair Growth Supplements
    • Best Vision Supplements
    • Best Memory Supplements
    • Best Natural Testosterone Supplements
    Menu
    • Diet & Weightloss
    • Exercise and Fitness
    • Beauty and Skin
    • Hair and Nails
    • Strength Training
    • Yoga
    • Dietary Supplements
    • Over-40 Supplements
    • Sexual Health
    • Dental Health
    • Men’s Health
    • Women’s Health
    • Sleep and Dreams
    • Best Weight loss Supplements
    • Best Fat Burner Supplements
    • Best Hair Growth Supplements
    • Best Vision Supplements
    • Best Memory Supplements
    • Best Natural Testosterone Supplements
  • Relationship

    Blogs and Tips

    ALL
    • Females in Relationship
    • Men in Relationship
    • Dating Tips
    • Finding yourself
    • Marriage Tips
    • Love
    Menu
    • Females in Relationship
    • Men in Relationship
    • Dating Tips
    • Finding yourself
    • Marriage Tips
    • Love

    Dating Guides

    ALL
    • Best Catholic Dating Sites and Apps
    • Best Christian Dating Sites
    • Best Pagan Dating Sites and Apps
    • Best Teen Dating Sites and Apps
    • Best Dating Apps for College Students
    • Asian Dating Guide
    • Japanese Dating Guide
    • Filipina Dating Guide
    • Indian Dating Guide
    • Black Dating Guide
    • Russian Dating Guide
    • Best Free Trucker Dating Sites and Apps
    • Best Dating Sites and Apps for Marriage
    • Best Free Crossdresser Dating Sites and Apps
    • Best German Dating Sites
    Menu
    • Best Catholic Dating Sites and Apps
    • Best Christian Dating Sites
    • Best Pagan Dating Sites and Apps
    • Best Teen Dating Sites and Apps
    • Best Dating Apps for College Students
    • Asian Dating Guide
    • Japanese Dating Guide
    • Filipina Dating Guide
    • Indian Dating Guide
    • Black Dating Guide
    • Russian Dating Guide
    • Best Free Trucker Dating Sites and Apps
    • Best Dating Sites and Apps for Marriage
    • Best Free Crossdresser Dating Sites and Apps
    • Best German Dating Sites
  • Trading School

Student Loan: What is it and How does it work

Written and Published by Dumb Little Man on September 12, 2021 - Reviewed by Dumb Little Man

 Student Loan: What is it and How does it work
Education Featured Lifehacks Money Most Popular Tips
by Dumb Little Man September 12, 2021

Taking a student loan can be quite an arduous process for a first-timer. This post aims to answer all the questions you might have budding in your mind about student loans. What they are, the considerations you need to get behind before applying for a loan, the different loan types, and how you can apply.

It might not be the most straightforward ride you have been on, but with 70% of college students nationwide borrowing money to finance their education, you are not alone. And it is a temporary sacrifice with long-term gains and an opportunity to meet and exceed your goals.

But first.

Table of Contents

  • What are student loans?
  • How do student loans work?
  • Types of student loans
  • In conclusion
  • FAQs

What are student loans?

What are student loans?Photo: brookings.edu

Like it sounds, student loans are loans students take out to help pay for school to be paid back later in the future. It is pretty much like any other loan, except that it has some unique attributes. These attributes and other distinctions will be discussed below.

How do student loans work?

While a loan differs from collecting money from your parents or your best bud. There are some things you need to factor in before deciding which type of loan you would consider. These factors are as follows:

⓵ Student loan interest rates

The interest rate is probably the most important factor when deciding the tune of your loan and the type of loan you would be taking. The rate at which you take the loan is essentially the cost of taking out the loan. It is a percentage of the money you are borrowing that the lender expects you to pay back with the original sum.

There are two types of interest rates:

▶ Fixed interest rates: Fixed rates do not change through the course of the loan. They are more common for federal student loans as they are set yearly and remain fixed.

▶ Variable interest rates: Variable interests are set by the lender and change through the loan course. They are more common with private student loans.

⓶ Student loan origination fees

The origination fee is a one-time payment you are required to pay when you take out the loan. The percentage is not fixed and depends largely on the loan type and the lender. Federal loans are usually between 1% and 4%, while private loans do not always require you to pay origination fees. The fees are usually added to your loan to be paid later, so you do not have to worry about paying upfront.

⓷ Student loan repayment term

The repayment term is how long the lender is giving you to repay the loan. How long you have to repay the loan varies by lender and also loan type. The repayment term usually ranges from 5 to 15 years. Still, you must know what the repayment term is before taking out the loan.

Types of student loans

There are two types of student loans, each with its advantages and disadvantages over the other. They are:

① Federal student loans

These loans are provided by the government and are the more flexible loan option. There are many federal student loan options. The best one for you is determined by your year in school, the presence or absence of credit history, and your financial need.

The following are the types of federal student loans available.

⫸ Direct subsidized loans

These loans are available to undergraduate students with financial needs. The amount may not exceed your financial need, and your school determines how much you can borrow. The United States Department of Education pays the interest on the loan for the first six months after you leave school, while you’re in school half the time and during a deferment.

⫸ Direct unsubsidized loans

These loans are available to graduate and undergraduate students alike with no obligation to prove financial need. Your school determines your financial aid, and you would pay interest on this type of loan during all periods.

⫸ PLUS loans

Federal Direct PLUS loans are available to parents and graduates but with a much higher origination fee and interest rate than other federal loans available. You do not need a credit check to apply for this loan, but borrowers need to apply with a co-signer or endorser.

② Private student loans

The meaning of a private student loan and its intricacies are determined by the lender. These loans differ from federal loans in the sense that you do not need to have your credit or income reviewed to apply for the loan. Instead, the loans are granted with a parent or guardian co-signing. As a result, the loan appears on both the student and the co-signer’s financial records.

There are many types of student loans, and they include but are not limited to the following:

  • Student loans for bad credit
  • Medical school loans
  • State loans
  • Income share agreements
  • Institutional loans
  • Credit union loans
  • International student loans
  • Bootcamp loans
  • Bar exam loans

In conclusion

There are many student loan options for every student regardless of their academic level or financial background. For this reason, you must do your research to ensure that your choice of student loan fits your profile and, more importantly, your financial need. Good luck!

FAQs

Q1. How much student loan can I get?

A. The most you can borrow depends on several considerations. These considerations are:

  • Your choice of loan, federal or private.
  • Your school year

Graduates can borrow a total of $138,500 and up to $20,500 yearly, while undergraduates can borrow $57,500 and $12,500 yearly.

Q2. What type of loan is the best for college students?

A. The best loan option for college students is the subsidized loan. And this is because the federal government offsets the interest on the loan when you are in college.

Q3. What is a guaranteed student loan?

A. Guaranteed student loans are financial aid provided by the government for students to finance their college education. They are backed by government funds and distinct from alternative, personal, or private loans.

Q4. What is the average student loan debt?

A. The average student loan debt sits at about $38,000, while the average federal student loan debt is slightly lesser at about $36,000. Private student loans, on the other hand, are much higher at $55,000 for each borrower.

Like this Article? Subscribe to Our Feed!

Author: Dumb Little Man

Life tips and life hacks for happiness and prosperity.

  • Web
  • |
  • Twitter
  • |
  • Facebook
  • |
  • LinkedIn
  • |
  • More Posts(427)

Share This:

  • 0
    Facebook
  • 0
    Twitter
  • 0
    Linkedin
  • 0
    Email
Previous post
Next post

FOREX REVIEWS

Get daily tips and tricks for making your best home.
Follow us :
Instagram Pinterest Facebook Twitter
  • About Us
  • Advertise
  • Become a Contributor
  • Privacy Policy
  • Contact
Menu
  • About Us
  • Advertise
  • Become a Contributor
  • Privacy Policy
  • Contact
  • About Us
  • Advertise
  • Become a Contributor
  • Privacy Policy
  • Contact
Menu
  • About Us
  • Advertise
  • Become a Contributor
  • Privacy Policy
  • Contact
  • About Us
  • Advertise
  • Become a Contributor
  • Privacy Policy
  • Contact
Menu
  • About Us
  • Advertise
  • Become a Contributor
  • Privacy Policy
  • Contact
Get daily tips and tricks from Dumblittleman!
Your subscription could not be saved. Please try again.
Success! You are now a Dumb Little Man! :)
Follow us :
Instagram