Online Student Loans
Student loans online are the most common form of online financial aid, both for traditional brick and mortar universities as well as online universities. Online college student loans are everywhere; you just need to know where to look!
A loan is a form of aid to further your education that needs to be paid back, with interest. There are three major types of educational loans:
- Student loans
- Parent loans
- Private student loans (AKA alternative student loans)
All three offer funds to help the borrower pay for a student’s education. The traditional student loans online are the Stafford Loan and Perkins Loan. PLUS loans are parent loans, and private student loans allow the gap between cost of a university and the limited amount the federal government can give to be filled with private funding.
Student loans can usually be used for a multiple of items: tuition, room and board, transportation, living expenses, etc. However, for a student loan online the cost usually will only cover tuition, and the sometimes necessary cost of books.
Federal Student Loans
Federal student loans online are the most common form of student loan available. They are so popular with students due to their low interest rates and convenient repayment options. The federal Stafford loan is most popular and generally the most affordable.
There are two kinds of federal Stafford student loans: subsidized and unsubsidized.
Subsidized loans: the government pays the interest while you’re in school; given if the student can demonstrate extreme financial need
Unsubsidized loans: you pay all the interest, although you can have the payments deferred until after graduation
Subsidized loans are only available to individuals who show the greatest financial need. In fact, there is one federal loan purely for those individuals: the Perkins Loan. If a student is in extreme financial need, the government will offer them a Perkins Loan and pay the interest that would accumulate while the student was in school. The subsidized Stafford loan also works this way, but again, only for students with significant financial need.
StudentFinanceDomain.com has a great comparison chart of the eligibility requirements for both subsidized and unsubsidized Stafford loans. To see which you are eligible for, read their Guide to Choosing Your Federal Stafford Loan.
Student loans online are not only for students use. The parents, or legal guardians, of students can also apply for loans to help pay for their children’s education. The most well-known of this type of student loans online is called the Federal PLUS Loan.
Federal PLUS Loans are available to parents of undergraduate students who are enrolled in an undergraduate degree school at least part time. Although financial need is not a requirement of receiving this loan, good credit is. It is also encouraged to supply the student’s FAFSA when applying.
There are two types of PLUS Loans:
- Direct : U.S. Department of Education is the lender
- FFEL (Federal Family Education Loan): available through a private lender such as a bank
Keep in mind that these loans are not to be taken lightly. Parents are allowed to borrow student loans online only for the amount necessary, and fees up to 4% of the loan might apply. In addition, unlike student loans, the interest rates are not static. The interest rates change annually for both types of parent loans.
Private Student Loans
Student loans online from private lenders can come from banks, credit unions, online lenders, and other financial institutions. There are thousands of private student loans available, based on everything from ethnicity to volunteer involvement, and generally offer more money than federal student loans.
How do you get a private student loan?
Well, for starters, you need good credit. Credit is the biggest factor in gaining a private student loan online. If you do not have good credit then a cosigner is necessary.
Cosigners offer great benefits to students when applying for a private student loan, including:
- An added level of security for the funding company that the payments will be made on time
- Depending on the cosigners credit score you can get an even better deal on your loan than a typical student would
To learn more about private student loans, and student loans online in general, check out StudentFinanceDomain.com for more details.