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LEGAL DICTIONARY

Student Loan

A student loan is defined as a monetary sum that is borrowed by a student to finance their higher education. They are usually used to cover the cost of study supplies, college tuition, living costs, and other education-related expenses.

Payments are usually made once the student has finished pursuing their degree, with repayment terms and duration usually depending on the specific lender in question. When payments are deferred for a certain time period after studies have ended, this is known as a “grace period”.

Federal vs. Private Student Loans

There are many different types of loans available for students to choose from when looking to finance their studies. However, most types of loan agreements fall into two basic categories.

These two main types of student loans are as follows:

  • Federal student loans are a type of federal government financing that lets students borrow funds for educational purposes. Obtaining this type of loan involves filling out the Free Application for Federal Student Aid (FAFSA). Once the form has been completed, the schools included on the application will determine what financial aid package the student is eligible for. The amount provided by the loan will typically depend on the cost of the specific school the student plans to attend. Several types of federal student loans are available, including direct consolidation, direct subsidized, and direct unsubsidized loans. Credit checks are not typically required when applying for federal loans.
  • Private student loans are often pursued by borrowers that require additional funds on top of those issued through the federal government. These may include state-related nonprofits or school-issued institutional loans. Applications for private student loans generally follow the standard process of other private-sector loans and usually require a credit check. Students can apply directly to whichever individual private-sector lender they choose, according to their financial needs and personal eligibility.

Alternatives to Student Loans

Student loans are not the only options for students that are financially planning for their higher education studies. In fact, there are numerous other alternatives that can be explored in order to be able to pursue post-secondary education.

Below is a list of some of the most common alternatives to student loans:

  • Scholarships: An excellent alternative to student loans is to apply for a full or partial scholarship. There is a large number of scholarships available for students to apply for, most of which are merit-based. Scholarships are generally offered to students that excel athletically or are very involved in community or civil work. Various different types of entities offer scholarships, including government branches, charities, colleges, nonprofit organizations, and private individuals.
  • Student grants: Grants are a type of financial student aid that does not require repayment. They are generally aimed towards students who are underprivileged, part of a minority group, or who want to pursue a specific type of study. Most grant aid packages do not cover all of the student’s study-related expenses.
  • Work-study programs: Certain colleges and government organizations offer the possibility of working while studying. This provides the student with an opportunity to obtain extra money while gaining valuable experience. Some of these jobs include working as a teaching assistant, librarian, or research assistant.

Student Loan Relief and Forgiveness

In certain situations, student borrowers may be able to benefit from student loan relief. This is also known as “student loan forgiveness”, and it refers to the cancellation, discharge, or cancellation of federal student loans. Loan forgiveness releases the borrower from part or all of their obligations to pay back their federal student loan debt.

Student loan relief can occur on an individual basis due to personal circumstances or a significant life event, and also as a government-wide initiative in response to financial downturns or health crises.

Only federal loans qualify for loan relief, while private loans are not eligible. It’s also possible to earn it by working in public service or by undertaking income-related payment plans.

A student loan is defined as a monetary sum that is borrowed by a student to finance their higher education. They are usually used to cover the cost of study supplies, college tuition, living costs, and other education-related expenses.

Payments are usually made once the student has finished pursuing their degree, with repayment terms and duration usually depending on the specific lender in question. When payments are deferred for a certain time period after studies have ended, this is known as a “grace period”.

Federal vs. Private Student Loans

There are many different types of loans available for students to choose from when looking to finance their studies. However, most types of loan agreements fall into two basic categories.

These two main types of student loans are as follows:

  • Federal student loans are a type of federal government financing that lets students borrow funds for educational purposes. Obtaining this type of loan involves filling out the Free Application for Federal Student Aid (FAFSA). Once the form has been completed, the schools included on the application will determine what financial aid package the student is eligible for. The amount provided by the loan will typically depend on the cost of the specific school the student plans to attend. Several types of federal student loans are available, including direct consolidation, direct subsidized, and direct unsubsidized loans. Credit checks are not typically required when applying for federal loans.
  • Private student loans are often pursued by borrowers that require additional funds on top of those issued through the federal government. These may include state-related nonprofits or school-issued institutional loans. Applications for private student loans generally follow the standard process of other private-sector loans and usually require a credit check. Students can apply directly to whichever individual private-sector lender they choose, according to their financial needs and personal eligibility.

Alternatives to Student Loans

Student loans are not the only options for students that are financially planning for their higher education studies. In fact, there are numerous other alternatives that can be explored in order to be able to pursue post-secondary education.

Below is a list of some of the most common alternatives to student loans:

  • Scholarships: An excellent alternative to student loans is to apply for a full or partial scholarship. There is a large number of scholarships available for students to apply for, most of which are merit-based. Scholarships are generally offered to students that excel athletically or are very involved in community or civil work. Various different types of entities offer scholarships, including government branches, charities, colleges, nonprofit organizations, and private individuals.
  • Student grants: Grants are a type of financial student aid that does not require repayment. They are generally aimed towards students who are underprivileged, part of a minority group, or who want to pursue a specific type of study. Most grant aid packages do not cover all of the student’s study-related expenses.
  • Work-study programs: Certain colleges and government organizations offer the possibility of working while studying. This provides the student with an opportunity to obtain extra money while gaining valuable experience. Some of these jobs include working as a teaching assistant, librarian, or research assistant.

Student Loan Relief and Forgiveness

In certain situations, student borrowers may be able to benefit from student loan relief. This is also known as “student loan forgiveness”, and it refers to the cancellation, discharge, or cancellation of federal student loans. Loan forgiveness releases the borrower from part or all of their obligations to pay back their federal student loan debt.

Student loan relief can occur on an individual basis due to personal circumstances or a significant life event, and also as a government-wide initiative in response to financial downturns or health crises.

Only federal loans qualify for loan relief, while private loans are not eligible. It’s also possible to earn it by working in public service or by undertaking income-related payment plans.