High cost to acquire quality education is a common problem faced by the youth today. Education loans provide relief to the students and make college education possible for those who do not have the funds to pay for the fees.
There are several sources through which students can obtain loans quickly. These include private lenders, financial institutions, public lenders, banks, and even some government agencies. The federal and state loans include Federal Family Education Loan Program (FFELP), Stafford Loans, Perkins Loans, and Free Application for Federal Student Aid (FAFSA). The advantage of such loans is that they are the best source of funding for college students, but they are often considered to be bad credit. Federal loans come with a low interest rate (between 4.5% – 6%), are provided without a credit check, and after reviewing academic performance. These loans are not available to all, which forces students to hunt for private funding.
Requisites to Obtain a Loan
Requisites are the terms and conditions that have to be fulfilled when applying for a loan. Now, we can divide the fast loans for students into two categories, namely the ones that are granted at the start of the course and those that are granted in the middle of the year for some crisis or unforeseen expenditure.
The loan which is granted at the start of the year is used to pay for the tuition fees, teachers’ and universities’ fees. These loans are the biggest of all student loans and the principal amount is huge, whereas the term/time period is long and the interest/Annual Percentage Rate (APR) is quite low. Most of these loans are secured loans and usually, a parent acts as the cosigner. Apart from having a security, you need a background proof and good grades. Please note that not having a credit rating is ideal, as it will be a hindrance in the process of sanction.
The second type of loan is a smaller one and the principal amount is granted in the middle of the year. This is usually a cash advance loan to meet miscellaneous expenses such as insurance, dormitory fees, etc. Approval time is really quick, within a few hours. There are no major requisites as these loans are similar to unsecured personal loans. Hence, you will need only a cosigner or a guarantor. The credit score report of the guarantor or cosigner is really important as the interest rate and approval depends on this.
Applying to a public institution or a bank, during mid-year, is the best option, as Federal loans are granted only at the term’s beginning. The alternative is to approach a private lender, who will provide these loans very quickly, but will charge quite a high interest rate (sometimes higher than 18%).
Overall, consistently good academic performance, timely repayments, and researching the market for good lenders can get you a good deal.
Disclaimer: This article is for reference purposes only and does not directly recommend any specific financial course of action.