One of the basic needs of life is education. Without education, it is not possible for us to understand anything in this world. Education helps us to think about the betterment of self as well as society. It is helpful to make life better and make important decisions that may bring happiness to life.
This is why basic education has been made mandatory in most of the countries of the world. Maximum countries provide basic education to the children free of cost. Not only is this, in some countries, education in schools also free. They also allow some of the meritorious students to get an education in government expenses so that they can get into the best organization of the nation and serve the country.
What is a Student Loan?
Now the question is what about the students who are not allowed to get higher education from government organizations? Several institutions provide higher education to the students but since they are private organizations so the charges for the educational programs are higher.
So to organize for the money for education, they have to borrow money. There are many government and non-government organizations which provide loans to these needy students to meet up the expenses regarding the courses. These expenses include the fees for the courses, stationary as well as the loving cost of the student.
Types of Loans for Students
There are various agencies that provide student loans. These loans are of two types. The first one is federal loans which are taken from the government agencies by the students. Here the government doesn’t check for the credit score of the borrower and that’s why it is considered as an unsecured loan from the banks.
These loans for students can be taken by the student making his guardian as a co-borrower. This can be done up to a certain limit and if you exceed the limit then you need to provide a collateral for the loan. Here you don’t need to show any security for the loan. The loan is to be repaid after you get a job or after a certain time period after you complete the course.
Next come to the private loans which are provided by the private financial organizations. But here you need to have a good credit score for the loan.
Key Factors to Select Loans for Students
While you are applying for a loan to any of the financial institutions then you need to look after some of the key features of the loans and then only you can select the best loan for you. Those factors are described below.
- Interest Rate for Loan
While you take a loan from any bank or NBFC then you need to know about the rate of interest for the loan. Since the loans for students are unsecured so the interest rates may be a little higher than the normal loans. Generally, the rate varies from 10% to 16% depending on the policy of the institution or the bank.
- Fixed Rate of Interest
In most of the cases of private loans for the students, the rate of interest varies as per the change of situation in the market. But it is better to go for the loan offer only where you will get a fixed rate of interest.
- Processing Fee
Most of the private financial organizations charge a processing fee which contains a fixed amount along with a percentage of the total loan amount. So the lower the processing fee will be, the better the loan offer is for you.
- Additional Services
The federal lending organizations often offer you a grace period before they charge your borrowings.