Student loans | Refinance student loans, consolidation
General concept of student lending in the United States
Most American families cannot afford to pay for their child’s education, not only at a prestigious university, but also at a medium-sized college. In such cases, student lending comes to the rescue. This is a very common practice: it is profitable to take educational loans, there are solid delays and convenient repayment schemes.
The most popular student loan systems in the USA are:
student loan - student loan (issued directly to the student),
parent loan - parental loan (issued to the student’s parents),
private loan - private loan.
The Loan Consolidation system allows you to combine several loans, which significantly improves credit conditions and increases the repayment period compared to standard programs.
The first two programs are funded by the US government and are available exclusively to citizens and residents of this country. A foreigner can also use private lending, but it is extremely difficult to get a student loan on his own. The main feature of federal student loans is a reduced interest rate and the absence of the need to provide collateral, since it is assumed that the borrower has almost no own funds.
The main student loan is the so-called “Stafford loan”. It can exist in two basic versions:
Federal Family Education Loan Program (FFELP). In this case, non-state financial institutions act as creditors, but the US government is the guarantor of the refund;
Federal Direct Student Loan Program (FDSLP). In this case, the Federal Government is already acting as a direct creditor (through state financial institutions), and not simply guarantees the return of borrowed funds.
Stafford loans are subsidiary and non-subsidiary. Interest on subsidiary loans is paid by the US government, for non-subsidiary ones - directly by the borrower. Unconfirmed loans are available to almost all students (citizens and residents of the United States), for obtaining subsidiary loans requires proof of a difficult financial situation. In any case, the student can count on a deferment of payment (in some cases, until graduation).
Parents-dependent students can count on loans in the amount of:
2625 USD - the first year of study;
3500 USD - the second year of study;
5500 USD - each subsequent course.
Working students can get additional credits in the amount of $ 4000-5000 per year (depending on the course). The interest rate on Stafford loans is variable, but, regardless of the policy of the financial institution, it cannot exceed 8.25percent's .
Students who can prove that they are in a difficult financial situation have the opportunity to receive Perkins preferential credit. It is subsidiary (interest paid by the state). Usually, students are given a delay of the first payment of 9 months (sometimes more). The loan is issued at 5percent's per annum for a period of 10 years. There is a possibility of early repayment and cancellation of the loan.
The size of the loan is set by the financial aid service of a particular educational institution. For most colleges and universities, a limit of $ 3000 per year has been fixed ($ 5000 for postgraduate studies). For the entire course, a student can get a Perkins loan for $ 15,000, a graduate student - for $ 30,000.
Parents of students can take the federal loan for the education of the child. Unlike student loans, parent loans can cover full tuition fees. They are issued by both private and public financial institutions at no more than 9percent's per annum for a period of 10 years. It is clear that this loan is also intended only for citizens and residents of the United States.
Private student loans
Private lending is available to all students regardless of nationality: other criteria are required. In particular, Private International Student Loan is issued to foreign students.