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A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in the fact that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school. It also differs in many countries in the strict laws regulating renegotiating and bankruptcy. This article highlights the differences of the student loan system in several major countries.
Student financial aid in the United States is funding that is available exclusively to students attending a post-secondary educational institution in the United States. This funding is used to assist in covering the many costs incurred in the pursuit of post-secondary education. Financial aid is available from federal and state governments, educational institutions, and private organizations. It can be awarded in the form of grants, loans, work-study, and scholarships. In order to apply for federal financial aid, students must first complete the Free Application for Federal Student Aid (FAFSA).
In finance, unsecured debt refers to any type of debt or general obligation that is not protected by a guarantor, or collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment. Unsecured debts are sometimes called signature debt or personal loans. These differ from secured debt such as a mortgage, which is backed by a piece of real estate.
This article gives descriptions of mortgage terminology in the United Kingdom.
A Federal Perkins Loan, also referred to as a Perkins Loan, was a need-based student loan offered by U.S. Department of Education from 1958 until 2017. Created as part of the Federal Direct Student Loan Program, the Perkins Loan served to assist American college students fund their post-secondary education. The program was named after Carl D. Perkins, a former member of the U.S. House of Representatives from Kentucky.
A Stafford Loan was a student loan offered from the United States Department of Education to eligible students enrolled in accredited American institutions of higher education to help finance their education. The terms of the loans are described in Title IV of the Higher Education Act of 1965, which guarantees repayment to the lender if a student defaults. As of July 1, 2010, Stafford Loans are no longer being offered, having been replaced with the William D. Ford Federal Direct Student Loan Program.
A PLUS Loan is a student loan, which is part of the Federal Direct Student Loan Program, offered to parents of students enrolled at least half time, or graduate and professional students, at participating and eligible post-secondary institutions. The original, now obsolete, meaning of the acronym was "Parent Loan for Undergraduate Students".
The Federal Family Education Loan (FFEL) Program was a system of private student loans which were subsidized and guaranteed by the United States federal government. The program issued loans from 1965 until it was ended in 2010. Similar loans are now provided under the Federal Direct Student Loan Program, which are federal loans issued directly by the United States Department of Education.
The William D. Ford Federal Direct Loan Program provides "low-interest loans for students and parents to help pay for the cost of a student's education after high school. The lender is the U.S. Department of Education ... rather than a bank or other financial institution." It is the largest single source of federal financial aid for students and their parents pursuing post-secondary education and for many it is the first financial obligation they incur, leaving them with debt to be paid over a period of time that can be a decade or more as the average student takes 19.4 years. The program is named after William D. Ford, a former member of the U.S. House of Representatives from Michigan.
A private student loan is a financing option for higher education in the United States that can supplement, but should not replace, federal loans, such as Stafford loans, Perkins loans and PLUS loans. Private loans, which are heavily advertised, do not have the forbearance and deferral options available with federal loans. In contrast with federal subsidized loans, interest accrues while the student is in college, even if repayment does not begin until after graduation. While unsubsidized federal loans do have interest charges while the student is studying, private student loan rates are usually higher, sometimes much higher. Fees vary greatly, and legal cases have reported collection charges reaching 50% of amount of the loan. Since 2011, most private student loans are offered with zero fees, effectively rolling the fees into the interest rates.
Federal Student Aid (FSA), an office of the U.S. Department of Education, is the largest provider of student financial aid in the United States. Federal Student Aid provides student financial assistance in the form of grants, loans, and work-study funds. FSA is a Performance-Based Organization, and was the first PBO to be established in the US government.
Government sponsored Student Loans in Canada was designed to help post-secondary students pay for their education in Canada. The federal government funds the Canada Student Loan Program (CSLP) and the provinces may fund their own programs or be integrated with the CSLP. In addition, Canadian banks offer commercial loans targeted for students in professional programs.
Student loans in Norway are issued by Norwegian State Educational Loan Fund. Lånekassen provides both loans and grants. Loans are issued to students following studies at Norwegian universities and colleges. Qualified applicants studying abroad outside the Nordic region can also receive loan and grant support from Lånekassen. The status of a grant is conditional on passing all exams every semester. Portions of student loans can be converted into additional grant funding if the student achieves a high grade point average for the semester.
Student loans and grants in the United Kingdom are primarily provided by the government through the Student Loans Company (SLC), an executive non-departmental public body. The SLC is responsible for Student Finance England and Student Finance Wales, and is a delivery partner of Student Finance NI and the Student Awards Agency for Scotland. Most undergraduate university students resident in the United Kingdom are eligible for student loans, and some students on teacher training courses may also apply for loans. Student loans also became available from the 2016/17 academic year to postgraduate students who study a taught Masters, research or Doctoral course.
In the United States, student loans are a form of financial aid intended to help students access higher education. In 2018, 70 percent of higher education graduates had used loans to cover some or all of their expenses. With notable exceptions, student loans must be repaid, in contrast to other forms of financial aid such as scholarships, which are not repaid, and grants, which rarely have to be repaid. Student loans may be discharged through bankruptcy, but this is difficult. Research shows that access to student loans increases credit-constrained students' degree completion, later-life earnings, and student loan repayment while having no impact on overall debt.
Forbearance, in the context of a mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is "holding back". This is also referred to as mortgage moratorium.
Income-based repayment or income-driven repayment (IDR), is a student loan repayment program in the United States that regulates the amount that one needs to pay each month based on one's current income and family size.
Pay As You Earn (PAYE) is a federal student loan relief program signed into law on December 21, 2012, by President Barack Obama. It is one of four income-driven repayment plans.
Student loans in South Korea, are student loans provided to South Korea's students that are managed by the Korea Student Aid Foundation (KOSAF) which was established in May 2009. According to the governmental philosophy that Korea's future depends on talent development and no student should quit studying due to financial reasons, they help students grow into talents that serve the nation and society as members of Korea. Through the management of Korea's national scholarship programs, student loan programs, and talent development programs, KOSAF offers customized student aid services and student loan program is one of their major tasks.
A repayment plan is a structured repaying of funds that have been loaned to an individual, business or government over either a standard or extended period of time, typically alongside a payment of interest. Repayment plans are prominent within the financial industry of a national economy where liquid funds are in high demand to assist in investment opportunities, governmental expenditure or personal finance. The term first saw prominence with its use by the International Monetary Fund to describe its form of financial loan repayment from individual nations. Typically, the term "repayment plan" refers to the system of Federal Student Aid in the United States of America, which assists in covering tertiary education expenses of domestic students.
References
- ↑ "Direct PLUS Loans for Graduate and Professional Degree Students". Archived from the original on 7 August 2011. Retrieved 3 August 2011.
- 1 2 "PLUS loans are federal loans that graduate students and parents of dependent undergraduate students can use to help pay for college or career school". Archived from the original on 20 June 2015. Retrieved 16 April 2016.