Education Loans

An education loan is a type of loan for college or graduate students that wish to finance part or all of their educational costs. This loan, just like any other form of debt, must be repaid and usually accrues interest while the student is in or out of school depending on the loan terms.

There are three major categories that a student loan falls into: parent loans (PLUS loans, student loans (Stafford and Perkins loans), and private or alternative student loans. Another type of educational loan is a consolidation loan, which allows the borrower to lump (consolidate) some or all of their loans into one for convenience.

With rising college and tuition costs, very few students can afford to pay for their education without some form of financial aid. Nearly two-thirds of undergraduate students will graduate with some debt, accruing an average of nearly $20,000 in debt, according to the 2003-2004 National Postsecondary Student Aid Study (NPSAS).

Luckily federal law regulates creditors issuing out financial aid to college students. There is a ceiling on the amount of interest and fees lenders may charge for federally-guaranteed loans. And many lenders offer a wide variety of student loan discounts and incentives to attract borrowers. Options are available for those that suffer from financial hardship, such as losing a job or spouse, and repayment may be deferred for prolonged periods of time.

Applying for a student loan, although sometimes intimidating and complicated, is a fairly simple process. If you wish to apply for a student loan visit your University's financial department for more information.