Student Loan – An Apt Partner For Your Education


Definition Student loan or education loan is that segment of loans which finances the education related expenditures to a student. It is structured to help students pay their tuition fees, books and living expenses. Student loans differ from other loans in terms of tenure, repayment schedule and rate of interest.

Meaning Student loan enables a student to complete his or her education by getting the educational expenditures financed through authorized lenders. It is the loan which finances a student’s education related expenses viz. tuition fees, study material related expenditures and living expenses. A student can borrow a certain sum of money to get his education financed and the repayment is done in easy installments.

Immediate expenditure is borne by the financer and the loan is paid back at a later date by the student. It differs from other loans in various ways, the most important being loan repayment schedule and interest rates. Generally, these loans have a lower rate of interest and in most of the cases the repayment has a moratorium period. The moratorium period is generally the phase when the student is pursuing his education.

The repayment begins once the education is completed and generally from the next tax year. However, the interest starts getting accumulated as soon as the loan amount is disbursed. These loans are financed at a lower rate of interest and in many countries are provided at subsidized rates.

Student Loans In United Kingdom

In United Kingdom, the loans are generally financed by state owned student loan companies. Repayment depends upon the current income level. If it is below a certain threshold, repayment will not begin. However, the interest continues to accrue. A loan gets cancelled if a student dies or suffers from permanent disability. It is a great way for a student to get his or her education financed as the loan repayment begins only after completion of education and after a student achieves a certain income level. Loan can be repaid after a student completes his or her education and achieving a certain level of financial stability.

Student Loans In United States Of America

In the United States, there are predominantly two types of student loans. These are classified as federal government sponsored federal loans and private student loans. Private loans are generally financed by nonprofit institutions or institutional loans provided by educational establishments.

Federal loans can further be classified as subsidized and unsubsidized. Interest on loans does not accrue while the student is still pursuing the education. Interest accrual and repayment begin only after the completion of the education. In case of unsubsidized loans, interest accrual starts immediately upon loan disbursal. Federal loans are usually cheaper than private student loans. In the case of federal loans, repayment is income based, which means that repayment depends upon the income level of the individual rather than the outstanding amount. Income based loan repayment facility is not available for private student loans.

A student loan is the best way for a student to get the education financed and is a viable option for those who want to pursue higher education.


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