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STUDENT LOAN
Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually charge lower interest than other loans, and are also usually issued by the government.
Federal student loan consolidation
One oddity in the offerings by the US Department of Education is the federal student loan consolidation program. Unlike other forms of federal student loans, a consolidate loan for a student is a loan issued after the student graduates, as a means of extending the repayment term of federal student loans. While this is more expensive for students in the long term, initially it saves them money by reducing the monthly payment size, which is important for students who are unable to meet significant financial obligations immediately after graduation.
Repayment
Repayment terms are governed by the total amount owed. Repayment rates of the student loan debt are based on the existing student loan rates at time of application. Students can determine their loan information using the US Department of Education National Student Loan Database System (NSLDS) (http://www.NSLDS.ed.gov/). Federal Student loan rates are set each July for the following year based on the sale price of the 91-day Treasury Bill in the last auction of May.
Private financial aid programs
In addition to federal assistance, private student loans can often be obtained by students to pay for costs above and beyond what the government is willing to fund. This is especially true for students at undergraduate private institutions, graduate schools, and students attending schools for which federal financial aid is not available, such as K-12 preparatory schools.
Assistance
Private student loan programs can provide anywhere from $1,500 to $45,000, depending on the credit history and record of the applicant and any eligible co-signer. Most student loan programs have an aggregate limit as well, capping the total amount a student can have borrowed in their lifetime.
Rates and interest
Most private student loan programs are tied to one or more financial indexes, such as the Wall Street Journal Prime rate or the BBA LIBOR rate, plus an overhead charge. Because private student loans are based on the credit history of the applicant, the overhead charge will vary. Students and families with excellent credit will generally receive lower rates and smaller loan origination fees than those with less than perfect credit.
Eligibility
Private student loan programs generally issue loans based on the credit history of the applicant and any applicable co-signer/co-endorser. This is in contrast to federal loan programs which deal primarily with need-based criteria, as defined by the EFC and the FAFSA. For many students, this is a great advantage to private loan programs, as their families may have too much income or too many assets to qualify for federal aid, but insufficient assets/income to pay for schooling without assistance.
Additionally, many international students studying in the United States can obtain private loans (they are ineligible for federal loans in many cases) with a co-signer that is a United States citizen/permanent resident.
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