College education is expensive, and the majority of students looking to enroll may have to seek financial aid. However, there is a misleading notion that student loans are unaffordable and will burden the applicant for the rest of their lives. There is no truth in that, and even if there was, the perks of getting a college education outweigh any financial obligations that come with it. Read on for some of the benefits of student loans.
Student loans are cheaper
There is a massive difference between student loans and regular bank loans. Student loans come with significantly better terms that make them more affordable and less hectic for young college-bound students who don’t have their financial future figured out. Lower interest rates, a longer repayment grace period, and deferred payment options are some of the exclusive benefits of these loans. Almost all beneficial repayment options that come with standard loans are also offered in education loans. For instance, you can transfer your loan to refinancing providers such as Elfi and cut back on the repayment costs even more.
They are highly flexible
Compared to standard bank loans, student loans are flexible and a lot more manageable. Federal lenders, in particular, are revered for their flexibility and inclusivity, with virtually all college-bound students being eligible to apply. Private loans, on the other hand, may not be as flexible, but they still offer better terms than standard non-education loans. Usually, private lenders base loan terms on the student’s credit history or that of their co-borrower or cosigner. Applying for a student loan through a cosigner is beneficial in that it lets the applicant secure a college loan at favorable interest rates without affecting their credit history.
There are a plethora of benefits that come with getting your loan from lenders that offer loans strictly to students. Packages are usually built with the financial status of a typical college student in mind. They offer discounted fees and, depending on the borrower’s qualifications, waived early repayment penalties and origination fees. Federal loan programs are not customizable, and all student applicants are treated the same. What’s more, they have no early repayment penalties or origination fees attached to them.
Student loans may be subsidized
Student loan subsidization is only offered by the federal government, and a strict criterion is followed to determine qualification. Eligible borrowers of the Federal Direct Stafford Loan, for instance, can receive a subsidized version of the loan, with the government paying all accumulating interest on the principal while the student is enrolled in a recognized university.
A student loan is the first substantial financial transaction most young people engage in. The fear of the prospect of locking oneself in a lifelong economic conundrum is thus understandable, and students may be forgiven for thinking they are playing right into the hands of lending institutions. However, student loans have their upsides. All you need to do is understand your needs and all the loan options available to you. This way, you will know the best option for you relative to your long term financial plans and objectives.