Student loans have helped thousands of students and parents over the past years. They have assisted in paying for tuition fees, student accommodation, textbooks and many other things that are associated with studies and a student’s life in college.
Which institutions provide student loans?
Two types of organizations offer student loans, these are the federal government and organizations that disburse private student loans. While students can take many loans from both the government and these private institutions. The conditions are more or less the same. The student will have to start paying back the loan once they start working.
What are the differences between Federal Government and Private student loans? Let us explore them according to CFPB reports that give us some great insight.
Federal Government Student Loans
When it comes to federal government loans, there are some distinct differences. Federal government loans can be subsidized in some instances. Further, the loan interest rates are usually fixed and for these loans, any person that is pursuing a career in the public service sector can get an extended repayment period.
When a student takes out a loan from the federal government, there are many facets of borrow protection that are in place. These will include the discharge of the loan upon permanent disability or death of the borrow and the option to delay or temporarily forgo repayments.
These are some great features of a student loan taken from the federal government.
Private student loans
These are loans that are offered by private financial institutions like credit unions or banks. They may carry a variable interest rate and to qualify for one, you must have a good credit history, a co-signer in many cases will depend on the course of study or school you attend.
Private student loans are structured differently and may not be as flexible as federal government loans and in most cases carry no borrow protection. The benefit, however, is that the loans may be disbursed much sooner than a federal government student loan.
Defaulting on a student loan
The federal government loans carry rather hefty penalties for those who default on student loans. The argument here can be that there are so many benefits and options that there is no need to default. The private loans may carry lesser penalties but in both cases your credit history will be marked, and this will hinder your future applications for any financing requirements.
Student loans are a great facility to help you achieve your educational goals, but you must always ensure you pay them back on time.…