The Primer to Student Loan

Student loans have become an indispensable tool for families trying to pay the soaring cost of higher education, which at some private colleges and universities now tops $50,000 a year.

While included in our country’s way in "financial aid", higher education loans differ from scholarships and grants in that they must be paid back. The student loan can be available into three general categories: (a) the federally guaranteed loans made by banks and other lenders; (b) a federal direct loans made directly by the government; and (c) a private loans, which are essentially the same as any other consumer loan, from banks and other companies.

The interest rate paid by students on both guaranteed and direct loans is fixed and has been set by congress. And in the case of guaranteed loans, the our government pays a subsidy to lenders that make the loans and also guarantees the amounts loaned, almost completely protecting lenders from losses. Private loans usually have worse terms than either type of federal loan and the interest rates on private loans can change over time. To learn more about loan terms, you can seek a sample of Student Loan program courtesy of Total Debt Services.