US Federal sponsored student loans were first started in 1950s, under NDEA (National Defense Education Act) and those were provided to a selected category of students, e.g. those studying science, engineering or other specialized degree courses.
Student Loans in America are termed as a financial help that must be repaid, in comparison to other kinds of financial assistance like grants and scholarships which are not supposed to be repaid. As far as higher education in US is concerned, Student Loans play a vital role in their career.
Around 20 million students in US each year join college. Out of 20 million, nearly 60% i.e. around 12 million students in US borrow every year, to cover the costs of studies. Whereas in Europe, higher education gets funding through federal or government agencies, hence the student’s loans are less common there.
In Latin America and certain parts of Asia, post-secondary education funding is lesser – generally restricted to a small number of flagship universities, e.g. Mexican UNAM. – And for students it is hard to find channels to borrow money that is inexpensive and simpler to get.
On the other hand, in US, a large number of college going students and their families have to be dependent upon loan. Despite that the federal loans are provided through local taxes and State. In Private and public both loan establishments funding is generated through alumni and donor’s aid.
Students Loan Providers in USA
There are two types of student loan,private student loans and federal loans. The Federal loans, which bears an application for FAFSA, are further divided into subsidized (financed by the government till a student has studied at the most half-time) and unsubsidized. Student Federal loans are financed up to undergraduate level only. The sanction of Federal subsidized student loans are most sought after and are considered as the best loans, however, unsubsidized loans are considered having an advantage over private student loan.
Certain Student Loan Company, have their own student loans term and conditions and are considered sound proof over expensive private sector student loans. A student can get loan for the expenses such as for books, transportation, tuition, and room and boarding and computer expenses.
The governmental loans prepare students to take (Perkins and Stafford loans). As most students do not possess a credit history, (aspirants of taking student loans), it is the generosity of federal student loans that a student is not supposed to pay installments right from the point of borrowing, instead he or she is supposed to pay by at least half time of the their studies.
US government student loans and certain private student loan institutions are supposed to be discharged in case of bankruptcy that showed “undue hardship”.
The higher limit of Federal student loan for a graduate is $8,500 in case it is subsidized Stafford and for unsubsidized the limit is $12,500 Stafford. Some other students go for Federal Perkins Loans in this kind of a student loan the maximum limit is $6,000 annually.
Several students from other countries in US are not eligible for federal loans have to be dependent upon private loans.