What is an Education Loan?
An education loan is used to finance a person’s studies and other college expenses. There are many institutions in Singapore and other countries that offer education loan.
While you are still studying, most lenders will have your payment deferred so you must focus on your studies and you can then start repaying them after the six months grace period from your graduation.
Federal Student Loans
Most students who wanted to go to school but do not have the funds they need would first seek help from the government and ask for a federal government funding where the government will sustain the education needs of the student such as the tuition fee and, and the student can then pay after college.
When applying for federal government funding or the Free Application for Federal Student Aid (FAFSA), the applicant should first get a FAFSA form and place the necessary details in the form. After they have submitted the form, the government will check the financial background of the applicant like their parent dependency or situation and makes sure that he or she needs their help.
There are different types of federal student loans which includes the direct consolidation loan, direct subsidized and direct unsubsidized loan for you to choose from. In a subsidized loan, the loan will cover the student’s interest in school while a subsidized loan will have deferred interest.
One of the reasons why students will apply for a FAFSA first is that they have a more flexible repayment term and if you are not able to repay your loan right away, they may also offer the borrower a forgiveness program where they are given a chance to repay their loan with a low interest rate.
Private Student Loans
If after your federal government funding, you found out that didn’t get their approval, you can choose to have a private student loan instead. You can also ask for a private student loan if your federal government funds are not enough to cover all your school costs.
A private student loan is offered by other lenders such as the licensed money lenders and what differs a federal government funding with private student loans is that the latter has a higher interest rate which is not too practical for those who are short with funds already, but there are still a lot of students who would grab a private student loan because they don’t have any other choice.
Before you apply for any loan, you should think thoroughly whether it is essential for you to do so. It would take years to repay the full amount of your loan plus its interest per annum thus you should only apply for an education loan if you are willing and have decided to make loan repayments and its challenges.
How to Pay Your Education Loan
There are ways on how you can repay your education loan faster such as through finding a part-time job during college where you can both earn money while studying. If you are going to find a part-time job, you can already start paying your education loan so that you can fully pay your education loan earlier and save money from the yearly interest rate.
You may also opt to choose a school with a lower tuition fee or try to find an organization that offers financial support to students so that you can borrow a lower amount of money which you can quickly repay in the future.
After graduation, licensed money lenders would give you six months grace period where you are allowed not to pay your education loan yet that is why a lot of graduates will take this opportunity to look for a high paying job so, after six months, they already have their monthly income that can afford their monthly repayments.
For those graduates who can get an education loan from several lenders, they may choose to consolidate all their loans into one which will make it easier for them to manage their loans. Licensed money lenders also offer consolidation debt loan for those borrowers who wanted to manage their existing loans.
Having many loans would be confusing for some, and if you are going to compute the summation of the interest rates of these loans, you would be paying a huge interest rate that is why applying for one loan with only one interest rate and monthly repayment, you can avoid being financially stressed.
Reaching our dreams is indeed everybody’s goal hence a lot of institutions and businesses are already in the country to help those college aspirants who want to reach their dreams and get the degree they’ve always wanted.