Types of Student Loans Online

A college education is the goal of many young people as well as adults, unfortunately many individuals feel that this goal is completely out of their grasp due to financial difficulties. Student loans are one way that individuals who are interested in fulfilling their dream of a college dream can make that dream become a reality.

There are many different types of student loans available. In addition to private student loans, which are offered through individual lending institutions and banks, the federal government also offers two different types of student loans. The two types of student loans offered by the federal government are broadly known as subsidized and unsubsidized student loans. The major difference between these two types of student loans involves whether the student is required to begin paying back interest on the loans while in school or not. With subsidized student loans, the student is not required to begin repayment until six months after graduation or dropping below half-time enrollment. This type of loan is known as a subsidized student loan because the government will actually pay the interest on the loan while the student is in school. In order to be eligible for this type of student loan, the individual must meet financial need requirements and be US citizen or non-citizen who is enrolled at least half-time.

Unsubsidized student loans are not based on financial need; however, students will need to either begin interest payments while still in school or capitalize the interest on their student loans. The amount of money that a student can borrow while in school will typically depend on a variety of factors. In some cases, it may depend on the type of student loan they are taking out. In other situations, the amount of money allowed to be borrowed may depend on the year in school in which the student is enrolled. For example, with a subsidized student loan, an individual is allowed to borrow $2625 during their first year in school and $5,500 during years 3-5 in school. Graduate students are eligible to borrow up to $8,500 per year under subsidized student loan guidelines. Other factors that can affect the amount of money a student is eligible to borrow also include the living arrangements of the student. Students that are classified as independent students are allowed to borrow more money than dependent students; which can affect loan amounts. Under unsubsidized loan regulations, independent students can borrow about $4000 more during the first year of school than dependent students and $5000 more during years 3-5.

Student loans also typically involve a variety of payment options. In many cases, students can exercise the option to take up to ten years to pay off their student loans. In certain circumstances, special extensions can also be granted for longer periods of time. Deferment periods are also commonly available for students who have difficulty finding work following graduation or who experience temporary financial difficulties, making it hard to meet loan repayments at the time. Students may also be able to consolidate multiple loans in order to take advantage of lower interest rates and payments.

Government student loans are often preferential over private student loans because they come with lower interest rates and the consumer's credit worthiness may not be a requirement in order to receive loan approval. Students who are not eligible for subsidized student loans; however, may find it necessary to combine unsubsidized student loans with private loans in order to come up with enough funds for educational expenses.