Home Student Loans What Are Student Loans?

What Are Student Loans?


University and high school students receive student loans to cover the costs of their education during their education. In fact, students who do not qualify for student loans look for different methods to cover their educational expenses. Usually these are part-time jobs and they work at or near the school.

There are two types of student loans; federal student loans and private student loans. Students who do not qualify for federal student loans apply for special student loans.

How to apply for student loans?

In order to apply for federal student loans, students must fill in the application form after accessing the FAFSA website. Based on your income information in FAFSA, you are eligible for federal student loans.What should be known to those applying for federal student loans and any federal assistance;ü  It is free to apply for federal student loans or any form of federal assistance. If the website you use requires a fee, you are using the wrong website.ü  Complete FAFSA every year as you will need to make university payments.ü  Pick up as soon as possible after 1 October. Because the first ones are better. The reason for this is that some grant money is given on a first come first served basis.

Since private student loans are granted by financial institutions and banks, direct lenders are applied. Those who wish to receive private student loans should follow these instructions;

  • Visit the lenders’ websites.
  • Review the loan interest rate, the flexibility of repayment options, and other benefits.
  • Learn about payment amounts and interest rates for a few lenders and create alternative options for yourself.
  • Once you have learned the payment terms that you have to endure, you can also set your own terms and qualify them accordingly.
  • Once you have decided on the lender, apply directly on the website. Here you will choose the type of payment and interest you want.
  • You can add a cosigner that will allow you to borrow.
  • The lender will make a decision after checking your credit and, if applicable, your cosigner.

How do you accept federal or private student loans?

To accept federal student loans, you must sign and return your financial aid award letter. You may need to take part in your school’s admission counseling to understand that you are sure of your debt obligations. In addition, you must sign a Master Promissory Note (MPN) to accept credit terms.

Admission process of private student loans;

  • You must select the repayment option and interest type of the loan.
  • You or your recipient will accept the credit terms and sign electronically.
  • Your school will be asked to confirm that you are involved in verification of your enrollment and the amount of credit requested.

Both types of student loans are legal and therefore you must read and accept the payment terms carefully.

How to and how long to pay student loans?

Payment options and terms, such as applications for student loans, vary. For federal student loans, student loan payments begin 6 months after you finish school, and for private student loans, usually 6 months after the end of school.

Federal student loans are examined in 3 groups;

  • Standard repayment plans,
  • Graduated repayment plans,
  • Extended repayment plans.

Standard repayment plans;

The amount of monthly debt payment varies according to the total debt amount. In addition, monthly payment amounts vary according to minimum payment amount of student loans and current interest rate. According to this payment plan is paid within 10 years ie the standard payment period.

Graduated repayment plans;

Monthly payments start in proportion to interest payments and increase every 2 years. Because in this process, your income is assumed to increase continuously, albeit slowly. A period of up to 30 years is allowed to repay student loans.

Extended repayment plans;

In this payment plan, the period given for repayment of student credits goes up to 30 years. It is important to note both the total amount of the loan and whether federal student loans are consolidated.

  • Private student loans;

The standard period for this type of loan is 10 years. However, it becomes clear within the time period that the lenders want. The payment periods for special student loans vary between 5 and 15 years. Another factor that extends the payment period of special student loans is the consolidation of special student loans. When the special student loans are consolidated, the payment period will increase but the interest rates that are to be paid also increase.

How to pay student loans with income-driven payment plans?

There are also income-driven payment schemes to pay federal student loans. These payment plans are divided into 4 in their own. Other than REPAYE payment plans, your spouse and tax files must be separate. Because when you have a joint tax file with your spouse, your spouse’s income is included in the payments. You usually make payments up to 10% of your income. Optionally, you can increase your monthly payment to 15% of your income. The standard period for these student loans is usually 10 years, but varies in spouse-related situations. Generally, your student loan debt is forgiven within 20 or 25 years. There is also a period of repayment of a separate student plan for undergraduate and graduate students according to the REPAYE payment option. The length of student loan debt forgiveness for undergraduate students is 20 years, and the period of student loan debt forgiveness for graduate students is 25 years.


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